Means treating every single day as a lever for unlocking cash.
Improving any CCC component by just 1 day creates real, measurable cash flow gains.
What “power of 1” means in CCC terms
CCC is made of three levers:
DSO — Days Sales Outstanding
How long customers take to pay you.
DIO — Days Inventory Outstanding
How long inventory sits before being sold.
DPO — Days Payables Outstanding
How long you take to pay suppliers.
CCC = DSO + DIO − DPO
The power of 1 says:
Improve each lever by just 1 day and measure the cash released.
Why 1 day matters more than people expect - A single day shift can free up tens of thousands to millions depending on revenue scale.
Example:
If your business has $20M annual revenue, each day of DSO is worth roughly:
$20,000,000 / 354 = $54,795
So reducing DSO by 1 day frees $55k in cash.
Do that across DSO, DIO, and DPO and you might unlock $150k–$200k without selling more or cutting costs.
How to apply the power of 1 to each lever
• DSO (get paid 1 day faster)
• tighten invoice accuracy
• send invoices earlier
• follow up sooner
• offer small early‑payment incentives
• DIO (hold inventory 1 day less)
• reduce safety stock
• improve forecasting
• shorten production cycles
• increase inventory turns
• DPO (pay suppliers 1 day later without harming relationships)
• negotiate terms
• align payment runs with cash cycles
• use digital AP to avoid paying early by accident
Why this approach works
• It avoids overwhelming “big transformation” projects
• It creates quick wins that compound
• It builds a culture of cash awareness
• It’s measurable and easy to track weekly or monthly
McNamara & Company - Chartered Accountants, located minutes from the Melbourne CBD
www.mcnamaraandco.au/contact-us
Phone +61 3 9428 1062
Email admin@mcnamaraandco.au
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