Collection effectiveness index calculator
CEI is a liquidity and working-capital metric, calculated as (Opening AR + Credit sales − Closing total AR) ÷ (Opening AR + Credit sales − Closing current AR). Percent of collectible AR actually collected; 100% is perfect. See order to cash.
- Formula
- (Opening AR + Credit sales − Closing total AR) ÷ (Opening AR + Credit sales − Closing current AR)
Collection effectiveness index
CEI = (Opening AR + Credit sales − Closing AR) ÷ (Opening AR + Credit sales − Closing current AR)$
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Collection effectiveness index
89.1%
How it’s worked out
- 1Collected$500,000 + $1,200,000 − $560,000$1,140,000
- 2Collectable$500,000 + $1,200,000 − $420,000$1,280,000
- 3CEI$1,140,000 ÷ $1,280,00089.1%
Runs in your browser; nothing you type is sent anywhere. Amounts in US dollars.
How to read it
CEI divides what was collected by what could have been collected — everything except invoices not yet due.
It is a cleaner measure of a collections team's performance than DSO, because it is not moved by how fast sales are growing.
Common mistakes
- Using total closing receivables in the denominator instead of only the current (not yet due) portion.
- Mixing periods for opening AR and credit sales.
Questions
- What is a good CEI?
- 100% means everything that was collectable in the period was collected. 80% or above is often considered strong.
- Why use CEI instead of DSO?
- DSO is distorted by sales growth and the timing of invoices; CEI compares collections only against what was actually due.
Read it with
The metrics read alongside this one, and the terms it is confused with.
- DSO calculatorDSO is a liquidity and working-capital metric, calculated as (Ending AR ÷ Credit sales for the period) × Days in the period.Calculator
- Receivables turnover calculatorReceivables turnover is a liquidity and working-capital metric, calculated as Credit sales ÷ Average AR.Calculator
- CEICEI is a liquidity and working-capital metric, calculated as (Opening AR + Credit sales − Closing total AR) ÷ (Opening AR + Credit sales − Closing current AR).Term
The formula is the one the glossary states, and the arithmetic is unit-tested. A ratio with nothing to divide by shows a dash — undefined is not zero. General information, not financial advice.