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Podcast (10k-podcast): Play in new window | Download (Duration: 28:23 — 26.0MB)
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Welcome to the fifth episode of our “Protect Your Amazon Profit” series. In this episode, we’ll be discussing how to maximize your profit with the cash conversion cycle formula. As an e-commerce brand owner on Amazon, it’s essential to scale your brand with minimal capital. Optimizing your cash conversion cycle is one way to achieve this goal. This post aims to provide you with the necessary information and tips to improve your cash conversion cycle and scale your brand successfully.
Importance of optimizing cash conversion cycle for Amazon sellers
Optimizing your cash conversion cycle is critical for Amazon sellers. It’s a metric that measures how long it takes for your company to convert resources into cash flow. The faster you can convert your resources into cash, the more profitable your business will be. Helping you maximize your profit with the cash conversion cycle formula. We’ll discuss its importance, why it matters, what we want, classic mistakes to avoid, and five to ten talking points to help you optimize your cash conversion cycle.
Why This Matters
Direct impact on profitability
Optimizing your cash conversion cycle has a direct impact on your profitability. The faster you can convert resources into cash, the more capital you’ll have available to invest in growing your business.
Grow faster By improving your cash conversion cycle, you can grow your business faster. You’ll have the capital available to invest in inventory, marketing, and other growth initiatives.
Improving business sustainability Optimizing your cash conversion cycle can improve the sustainability of your business. It ensures that you have the capital to meet your financial obligations and invest in growth.
Lower investment for same profit! By optimizing your cash conversion cycle, you can achieve the same level of profit with lower investment. E. Lower or no debt for same profit You can achieve the same level of profit with lower or no debt by optimizing your cash conversion cycle. F. More sellable business! By optimizing your cash conversion cycle, you’ll have a more sellable business. Investors and buyers value businesses that have a strong cash conversion cycle.
What We Want
Quicker inventory turnover To improve your cash conversion cycle, you want to achieve quicker inventory turnover. You should aim to keep your inventory moving as quickly as possible.
Faster accounts receivable collection You should aim to collect accounts receivable as quickly as possible to improve your cash conversion cycle.
Efficient accounts payable management Efficient accounts payable management is critical to optimizing your cash conversion cycle. You should aim to pay your suppliers as slowly as possible without hurting your relationships with them.
Classic Mistakes to Avoid
Overstocking inventory Overstocking inventory can tie up your capital and hurt your cash conversion cycle. You should aim to keep your inventory levels as lean as possible.
Poorly negotiating payment terms with suppliers Poorly negotiating payment terms with suppliers can hurt your cash conversion cycle. You should aim to negotiate payment terms that are favorable to your business.
Having no cash flow projections Having no cash flow projections can hurt your cash conversion cycle. You should aim to create cash flow projections to help you plan and manage your business.
Ignoring them! Ignoring your cash conversion cycle can hurt your business. You should aim to monitor and improve your cash conversion cycle regularly.
Main Body: 5-10 Talking Points
Accurate demand forecasting Accurate demand forecasting can help you optimize your inventory levels and improve your cash conversion cycle.
Smart inventory management techniques
Smart inventory management techniques, such as just-in-time inventory management, can help you keep your inventory levels lean and improve your cash
Get a free Amazon profit audit
Get a free audit from me, Michael Veazey, personally. As long as you have at least $10K/€10K/£10K in monthly revenue.
You can be a reseller or Private label/custom product brand owner
Just click the link below, scroll down, click on “Amazon audit” and book in a time!
