Amazon's secret to electric growth in 2 minutes 🚀🚀🚀

Read time - 2 minutes

Hey Everyone 👋

Elite companies, in all industries, have 300% more cash on hand 💵💵💵 compared to the average. They use their own cash to fuel profitable growth. If you want to be elite, you must track this metric: Cash Conversion Cycle (CCC) is simple but has far-reaching applications. It even has the stamp of approval from Amazon, which famously used maniacal tracking of CCC to dominate other retailers during the 2000s/2010s. They focused on it because: It impacts: 1. Finance 🤑 2. Operations ⚙️ 3. Relationship Management 🤝

One centralized KPI keeps departments working together. The best part? It's centered around cash (the lifeblood 🩸of your business).

What is CCC? The time (in days) it takes a dollar to go from product or service to cold hard cash in the bank. Note: CCC is used for inventory investments, but the service equivalent is called Service-to-Cash Cycle, it's the same principle, so we'll use CCC for simplicity.

How is it measured? In days, and... Above⬆️ 0 = longer to sell & collect cash than to pay vendors. Below ⬇️0 = faster to sell & collect cash than to pay vendors. The lower, the better. Higher numbers indicate current or future cash flow issues. CCC is typically considered a financial metric but has value as a company-wide measuring stick. How to use it (and what it means) across departments:

Finance:

Strong (negative) CCC means there is cash to fuel growth. Without it, growth must be financed, causing risk (personally guaranteed loans) and further impaired cash flow (interest payments). Long accounts receivables (A/R) cycles are a silent cash flow killer because you've paid the costs of goods sold but have not collected the revenue...cash went out but didn't come in. Reframe A/R as interest-free loans to customers that bear a high opportunity cost.

Collect money that's owed to you!

Operations:

Collecting cash quickly is a hallmark of operational efficiency. It requires cross-department communication to sell, deliver service, invoice, and collect money fast. A low CCC indicates departments are working well together and have timely access to information that keeps the company pushing forward.

Relationship Management:

Negotiating advantageous payment terms with clients and vendors means being liked and having solid relationships. A low CCC indicates that key accounts and supply chains trust your organization to deliver its promises. A strong customer base and happy suppliers are foundational for a healthy business in the long run.

Overview:

Focus on improving communication and relationships, and your cash position will undoubtedly improve. Using your own cash to fuel growth reduces risk, increases equity value, and allows you to sleep better at night!

And if you don't trust me, trust Jeff Bezos!

Thanks for reading,

Barrett

Schedule a Strategy Session with Barrett

Brightline Media:🚀🚀🚀

So many companies can't seem to improve their search engine rankings — and 95% of the time, it's the same story...they have NO authority due to a non-existent backlink profile.

Securing high-quality guest post style backlinks will turn your website from a box-checker to a money-printing machine — let's see if I can help!

Please email me at [email protected] with any questions, feedback, ideas, or opportunities!