What is the cash conversion cycle?

Cash Conversion Cycle (CCC) = Days Inventory Outstanding + Days Sales Outstanding − Days Payable Outstanding. It measures how many days cash is tied up in operations between paying suppliers and collecting from customers. Lower is better.

What is MPBF in working capital finance?

MPBF (Maximum Permissible Bank Finance) is the upper limit of bank funding for working capital, computed using the Tandon Committee II formula: MPBF = 0.75 × (Current Assets − Other Current Liabilities). Banks use this to size CC / OD limits.

How do I reduce my debtor days?

Tighten credit terms in customer contracts, automate invoicing and reminders, offer early-payment discounts, use invoice discounting / bill discounting facilities, and put a structured collections cadence in place.

Cash Flow

Relevant for:For Startups For SMEs

Cash Flow Planning and Working Capital Management

Profitable businesses still fail when cash runs out. We build a 13-week rolling cash forecast, optimise working capital and bank limits, and put a disciplined collections and payables cadence in place — so the business never gets caught short.

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What's Included

13-week rolling cash flow forecast — best / base / stress

Working capital diagnostic — debtor, creditor, inventory days

Cash Conversion Cycle (CCC) computation and benchmarking

Bank limit (CC / OD) utilisation and MPBF analysis

Debtor ageing, credit policy and collections framework

Creditor terms review and early-payment discount evaluation

Scenario planning for hiring, capex and growth decisions

Our Process

STEP 1

Diagnostic

Map current cash inflows, outflows, ageing and bank limits.

Week 1

STEP 2

Forecast Build

Construct 13-week rolling cash forecast with assumptions.

Week 2

STEP 3

Optimisation

Identify levers — credit terms, payables, bank limits, inventory.

Week 2–3

STEP 4

Operating Cadence

Weekly cash call with finance + founder; update forecast.

Ongoing

STEP 5

Refinance / Limits

Negotiate enhanced bank limits or invoice discounting if needed.

As required

Documents Required

Last 12 months bank statements (all accounts)
Debtor and creditor ageing reports
Inventory ledger and ageing (if applicable)
Sanction letters for CC / OD / term loans
Hire-purchase, lease and EMI schedules
Annual operating plan and capex pipeline
GST returns and TDS challans (last 12 months)

Key Statutory References

Item	Reference
Banking Framework	RBI Tandon Committee II — MPBF
Statement of Cash Flows	Ind AS 7 / AS 3
MSME Payments	MSMED Act — 45-day payment rule, Sec. 15

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Frequently Asked Questions

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Scope of services and important information

This page describes services offered by RTA & Associates, Chartered Accountants. It is published for general information and does not constitute tax, legal, financial or investment advice, nor an offer or solicitation to provide services in any jurisdiction where we are not qualified to do so.

Any engagement is governed by a separate written engagement letter, which sets out the scope of work, the deliverables, the fees and the limits of our responsibility. Nothing on this page forms part of that engagement or varies its terms.

Descriptions of timelines, processes, costs and outcomes are indicative and depend on your specific circumstances and on third parties — regulators, exchanges, banks and counterparties — whose timelines we do not control. Statutory and regulatory requirements change; the current position should be confirmed before you act.

We are Chartered Accountants. Where a matter requires legal advice, advice on the law of a country other than India, or a regulated investment recommendation, we will say so and you should take advice from an appropriately qualified and licensed adviser in the relevant field and jurisdiction.