Collection Effectiveness Index Calculator
Find out how much of the money you could have collected this period you actually did collect. Enter opening receivables, credit sales and closing receivables, and track the index month by month.
Each month's opening balance is the previous month's closing balance, so you only enter it once.
80% is a common bar for a healthy B2B book. Set your own from last year's average.
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How to calculate the collection effectiveness index
CEI compares what you collected with what you could have collected. The top line is cash actually collected in the period. The bottom line is everything that was due: opening receivables plus new credit sales, minus invoices that are still within terms at the end.
Total trade receivables on the first day of the period. It is the closing balance of the previous period from the AR ageing or balance sheet.
Example: 1 April balance = ₹12 croreInvoices raised on credit during the period, net of credit notes. Take it from the sales register, leaving out cash, card and UPI sales.
Example: April credit sales = ₹20 croreEverything still open at period end, due or not. Use the grand total of the ageing report run on the last day.
Example: 30 April total = ₹14 croreThe part of closing AR that is not yet due, so nobody could have collected it. Take the "current" or "not due" column of the same ageing report.
Example: not yet due on 30 April = ₹10 croreOpening AR plus credit sales minus closing total AR. It includes cash and any other credits that cleared invoices, such as approved credit notes.
Example: 12 + 20 − 14 = ₹18 croreOpening AR plus credit sales minus closing current AR. The gap between this and the amount collected is the overdue balance you carried forward.
Example: 12 + 20 − 10 = ₹22 crore| Opening receivables | ₹12,00,00,000 |
| Credit sales in April | ₹20,00,00,000 |
| Closing total receivables | ₹14,00,00,000 |
| Closing current receivables | ₹10,00,00,000 |
| Collected (12 + 20 − 14 crore) | ₹18,00,00,000 |
| Available to collect (12 + 20 − 10 crore) | ₹22,00,00,000 |
| CEI | 81.8% |
- Add opening AR and credit sales: ₹12 crore + ₹20 crore = ₹32 crore
- Subtract closing total AR to get collections: ₹32 crore − ₹14 crore = ₹18 crore
- Subtract closing current AR to get what was collectable: ₹32 crore − ₹10 crore = ₹22 crore
- Divide and multiply by 100: 18 ÷ 22 × 100 = 81.8%
- The ₹4 crore gap is overdue money carried into May
On the same numbers, period-end DSO is 14 ÷ 20 × 30 = 21 days. To track days rather than effectiveness, use our DSO calculator, and for how many times a year receivables turn over, the AR turnover ratio calculator.
What is a good CEI, and why use it next to DSO?
CEI runs from 0% to 100%. The closer to 100%, the less overdue money you leave behind each period. Many B2B finance teams treat 80% as healthy, but the trend matters more than any single month.
| CEI | Reading | What to do |
|---|---|---|
| 90% and above | Excellent | Very little slips past due. Keep the cadence and watch for overly tight credit. |
| 80% to 90% | Healthy | Collections are working. Chase the few large accounts that make up the gap. |
| 65% to 80% | Needs attention | Overdue balances are building. Check disputes, unapplied cash and dunning coverage. |
| Below 65% | Weak | A large share of due money is not coming in. Review credit limits and escalation now. |
Indicative bands commonly used by credit teams, not a published standard. Compare against your own history first.
DSO divides receivables by sales, so a big billing month can lower DSO even when customers pay no faster. A slow month can push it up for no real reason.
Invoices still within terms drop out of the bottom line, so a sales spike does not flatter the index. It shows how well the team collected what it could.
Rising DSO with steady CEI usually means longer terms or a sales mix shift. Falling CEI with steady DSO is an early warning on collections.
Get a one-page summary of your CEI, collections, overdue carried forward and DSO, month by month if you use the trend.
How to improve your collection effectiveness
CEI goes up when less money goes past due without being collected. These are the levers that move it fastest.
A reminder a few days before the due date catches missing POs and wrong addresses while there is still time to fix them.
Receipts sitting unapplied leave paid invoices open, so closing AR looks bigger and CEI looks worse than reality.
Short payments and deductions stay overdue until someone owns them. Give each one an owner and a deadline.
A handful of large overdue accounts usually make up most of the gap. Call those first, every week.
Run CEI by region, collector or customer group. A healthy total can hide one team or segment that is slipping.
Always run the ageing on the last day and use the same "current" definition, or month-to-month changes are noise.
Frequently asked questions
CEI = (opening AR + credit sales − closing total AR) ÷ (opening AR + credit sales − closing current AR) × 100. With ₹12 crore opening AR, ₹20 crore of credit sales, ₹14 crore closing AR and ₹10 crore not yet due, CEI is 18 ÷ 22 = 81.8%.
Many credit teams treat 80% or more as healthy and 90% or more as excellent. It is a rule of thumb rather than a standard, so compare with your own trend and peers with similar terms.
Invoices that are not yet due at the end of the period, because nobody could have collected them yet. Some teams use a fixed cut-off such as 30 or 60 days instead. Pick one definition and keep it every month.
They answer different questions. DSO says how many days of sales are sitting in receivables and moves with sales volume. CEI says what share of collectable money you collected and is not distorted by a big or small billing month. Most teams track both.
Not with consistent data. CEI reaches 100% when nothing overdue is left at period end. A figure above 100% usually means closing current AR was entered larger than closing total AR, or the ageing and the ledger were run on different dates.
Monthly, with a rolling view. Monthly CEI shows problems quickly, and a weighted average of the months (total collected divided by total available to collect) smooths out timing quirks. Avoid running the formula once over a whole year: overdue amounts that were later collected drop out and the index looks better than it was. The trend tab gives you both from the same inputs.
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- CEI, collections and overdue carried forward
- Month-by-month trend and DSO side by side
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