Operational Insights
Cash conversion as a 100-day value-creation lever
EBITDA gets the slide. Cash conversion pays the debt. Treat them as a pair.
9 min
The issue
Value-creation plans overweight EBITDA and underweight the cash conversion cycle. A portfolio company can make the number and still miss a covenant because inventory and receivables moved the other way.
Why it matters
In the first hundred days, cash conversion is one of the few levers that is both material and available without a new commercial strategy. AR terms never enforced, inventory no one owns, payables managed as a relationship rather than a cycle, no 13-week cash view — surprises arrive as emergencies.
What management should examine
Map the cycle. Age the receivables and the inventory. Identify the ten customers and the ten SKUs that dominate working capital. Put an owner on each. Report weekly. Most of the improvement in the first two quarters is a management project that was never staffed.
A practical approach
Staff cash conversion as a first-hundred-days workstream with a named owner, a weekly view, and a target in days and dollars. This is also where fractional COO and CFO work should meet: finance can see the cash; operations can move the inventory and the cycle time.
Key takeaway
Sponsors who treat cash conversion as a paired workstream with EBITDA get a better covenant conversation — and often a cleaner EBITDA number, because the same discipline that collects faster also prices and produces with more intention.
Is cash conversion on the 100-day list, or only on the covenant slide?
Related pillar: Performance Improvement & Transformation