The cash conversion cycle is the number of days between your money leaving for a job and your money coming back from it.
Buy materials on the 1st, do the work on the 10th, invoice on the 12th, get paid on the 55th: your cash was somebody else's for fifty-four days.
The three parts
How long stock sits before it goes on a job — see inventory turns.
How long customers take to pay — days to get paid.
Minus how long you take to pay suppliers — days to pay bills, which works in your favour.
The first two cost you days. The third gives them back.
Why it is the number behind most cash problems
Every day in the cycle is a day of working capital the business has to find from somewhere: reserves, a line of credit, or delaying something else.
A business growing at a fifty-day cycle needs cash in proportion to its growth. That is why a company can be profitable, busy, and unable to make payroll simultaneously — the profit is real and it is fifty days away.
Shortening it
In order of how much they usually move it:
Invoice the day the work finishes, not at the end of the month. A fortnight of the cycle is often just administrative delay.
Take payment on site where the work allows. It removes the whole receivable.
Take deposits on anything with material cost up front.
Chase at seven days, not thirty.
Use supplier terms rather than paying early out of habit.
Each of those is a few days. Together they routinely take a fifty-day cycle to thirty, which is a third of the working capital requirement gone without earning anything more.