The Three Bucket Theory --Dickeson

We have three buckets for inventories: Raw, Wip and Fig—Raw materials, Work in process and Finished goods. Once the Fig is invoiced, it moves from finished goods to sales and is a claim for payment—an account receivable. Cash goes out of the box for raw materials; cash comes back into the box when the claim is collected. We're looking at three materials inventories and a receivable—a four-step cash-to-cash cycle.