Using cash-to-cash to benchmark service industry performance

Abstract

The cash-to-cash (C2C) metric is a measurement tool which may be used to bridge the management of firms and functions in a supply chain. C2C can be used by management to improve firm liquidity position and overall firm value. Measuring C2C also offers a consistent measure across time, helps to identify the greatest leverage points and opportunities for improvement, serves as a means to set goals for improvement within the supply chain, and can help to optimize the entire supply chain, instead of sub-optimizing individual portions. In this study, the authors illustrate the calculation of cash-to-cash, investigate changes in C2C between product and service industries to identify key differences, review and discuss key leverage points of C2C, and provide insights for today's service industry managers to understand the C2C metric from both accounting and supply chain management perspectives. Data in this study can also be used for benchmarking purposes.