In short
- CEI is the share of collectible receivables you actually collected.
- It’s expressed as a percentage; closer to 100% is better.
- Unlike DSO, CEI isn’t distorted by sales fluctuations.
- It measures the quality of collections effort, not just speed.
Collection effectiveness index, defined
The collection effectiveness index (CEI) answers a sharper question than DSO: of the money you could have collected this period, how much did you actually collect? It’s expressed as a percentage, where 100% means you collected everything that was collectible.
Because it’s a ratio of collected to collectible, CEI isolates collections performance from swings in sales volume.
How to calculate CEI
CEI = (beginning receivables + monthly credit sales − ending total receivables) ÷ (beginning receivables + monthly credit sales − ending current receivables) × 100.
The numerator is what you collected; the denominator is what was available to collect.
CEI vs DSO
DSO can move simply because sales rose or fell, even if your team’s effort didn’t change. CEI strips that out, so it’s the better measure of how effective collections actually is. A high CEI with consistent, automated follow-up is the sign of a healthy AR operation.
Frequently asked questions
What is a good CEI?
A CEI above roughly 80% is generally considered strong, and consistently above 90% is excellent. As with any metric, track your own trend rather than chasing a single benchmark.
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