As the name implies, this is the step where you actually fulfill the customers' orders by delivering your products or services. In some businesses, this may involve manufacturing a product before it can even be shipped to the customers. (Accelerating the manufacturing process, or the way in which you supply and deliver your goods or services, is beyond the scope of our current discussion of financial management.)
Accelerating the cash conversion period in the area of shipping and handling requires that you use the quickest means of delivering your products or services to your customers. Unnecessary delays in the shipping and handling of your products or services can add a significant number of days to your cash conversion period, not to mention the negative impact this can have on your customer relationships.
Most important is the fulfillment of your customers' orders with your
products or services. The cash conversion period is increased significantly if
your business is unable to supply your customers with the products or services
they order. For a retail business, or any business that sells products rather
than services, this occurs when the business fails to control its inventory. For
a service-related business, this occurs when the business cannot provide the
services requested by its customers.