To calculate the collection effectiveness index, take beginning receivables plus credit sales minus ending total receivables, divide by beginning receivables plus credit sales minus ending current receivables, then multiply by 100. Use one period, usually a month, for all four inputs.
Most CFOs already watch DSO, but DSO can look healthy while your accounts receivable collections slip. CEI shows how much of the money you could have collected, you actually did. Two companies can post the same DSO and have very different CEI, and we’ll show that with numbers.
Quick Answer The collection effectiveness index is the percentage of receivables you could have collected in a period that you actually collected. A score of 100 is perfect. Unlike DSO, it separates money that is merely outstanding from money that is past due, so it measures collection performance, not just speed.
The CEI formula compares what you collected against what was collectible. The AccountingTools CEI definition gives the standard form:
CEI = (Beginning receivables + Credit sales – Ending total receivables) / (Beginning receivables + Credit sales – Ending current receivables) x 100
The top line is cash collected. The bottom line is everything that was due or already past due. Think of it as one question: how much of what was collectible did we get?
The QServices Framework CEI Review = Billed → Collectible → Collected → Compare → Assign
Work in this order because you can’t judge collected cash until you’ve fixed what was collectible, and a score means nothing until someone owns the gap.
Current means not yet due. Some teams stretch that to 60 days or less, so state your cutoff every time you report. Changing it mid-year makes trend lines useless. Variants exist, including simplified versions that skip the current-balance adjustment, so check any vendor example before you copy it.
This example is illustrative, constructed by us, not sourced. Both companies start the month with $1,000,000 in receivables, bill $1,000,000 on credit, and end with $1,000,000 in total receivables. Their DSO is identical at roughly 30 days.
| Company A | Company B | |
|---|---|---|
| Beginning AR | $1,000,000 | $1,000,000 |
| Credit sales | $1,000,000 | $1,000,000 |
| Ending total AR | $1,000,000 | $1,000,000 |
| Ending current AR | $900,000 | $500,000 |
| CEI | 90.9% | 66.7% |
(1,000,000 + 1,000,000 – 1,000,000) / (2,000,000 – 900,000) = 1,000,000 / 1,100,000 = 90.9%.
(1,000,000 + 1,000,000 – 1,000,000) / (2,000,000 – 500,000) = 1,000,000 / 1,500,000 = 66.7%.
Same DSO, a 24-point gap, because B is carrying far more past-due money.
DSO measures the revenue-to-cash cycle. CFO.com’s analysis of the trouble with DSO quotes Credit Research Foundation president Terry Callahan making the point that payment terms drive most of DSO, so a 30-day-terms company is unlikely to push DSO below 30 whatever its collectors do.
DSO averages. A $100 invoice one day late and a $1,000,000 invoice 45 days late can produce the same blended number. CEI weights by dollars and by what’s overdue, so the big late invoice drags the score down where it belongs.
Key Insight DSO tells you how long cash takes to arrive. CEI tells you how well your team collected what was due. In our example, one DSO produced scores of 90.9% and 66.7%.
| DSO | CEI | |
|---|---|---|
| Question answered | How long does cash take? | How much collectible cash did we get? |
| Affected by payment terms | Heavily | Much less |
| Seasonal or growth swings | Distorted | Less distorted |
| Shows past-due severity | No | Partly |
| Data needed | Totals only | Totals plus an aging split (more setup) |
| Weakness | Hides who is late | Write-offs inflate it; backward-looking |
CEI costs more to set up because you need clean current-versus-past-due balances. Pair it with DSO, best possible DSO and average days delinquent (DSO minus best possible DSO), and read it next to your AR aging report. These accounts receivable metrics work as a set.
There’s no standard. Vendor guides call anywhere from 80% to 90% good, and 100% is unrealistic. The Credit Research Foundation’s national summary of domestic trade receivables shows member medians for CEI around 79 and DSO around 37.5 in the table we reviewed, though the page doesn’t label the period, so check the current edition before you quote it.
So a flat 85% bar is aggressive for a typical company. Our rule: benchmark against your own history, your industry and your terms, and ask what a good CEI percentage means for a CEI benchmark for US finance teams like yours.
Standards & References
- CRF national summary of domestic trade receivables: median CEI, DSO and best possible DSO for member companies
CEI works at the portfolio level, so calculate it on each collector’s own accounts. That’s our inference, not a published method, but it’s how teams make AR collector performance metrics fairer than raw DSO, which mostly reflects customer terms.
Real-World Scenario A typical case we see: a controller has two collectors, each with $400,000 starting AR, $300,000 of credit sales and $380,000 ending AR. Collector 1 has $300,000 current, so CEI is 320,000 / 400,000 = 80%. Collector 2 has $200,000 current, so CEI is 320,000 / 500,000 = 64%. Balances match, but Collector 2’s portfolio is far more past due. At the Compare stage, the gap becomes a customer-level review, not a blanket complaint.
Track it monthly, use it to rank customers by lowest score, and review it with the reduce DSO plan for a stretched AR team. A Power BI accounts receivable dashboard can show CEI by collector next to DSO.
We start at Billed and Collectible: clean inputs first, because a CEI built on messy aging is noise. Our AI agents work inside your ERP, and your team approves every action before anything posts.
This sits inside our accounts receivable automation work, with agents running in your own Azure tenant. See also our accounts receivable management guide.
Implementation Checklist
- Cutoff for current balances written down and approved
- Beginning, ending total and ending current AR reconcile to the ledger
- Credit sales exclude cash sales
- Write-offs are tracked separately
- CEI is calculated per collector
- CEI is reported next to DSO every month
- A named owner exists for the lowest-scoring customers
The collection effectiveness index gives you what DSO can’t: a dollar-weighted view of whether your team collected what was due. Pilot it on one collector’s portfolio next month, then book the AR Cash Assessment.
Written by Rohit Dabra
Co-Founder and CTO, QServices IT Solutions Pvt Ltd
Rohit Dabra is the Co-Founder and Chief Technology Officer at QServices, a software development company focused on building practical digital solutions for businesses. At QServices, Rohit works closely with startups and growing businesses to design and develop web platforms, mobile applications, and scalable cloud systems. He is particularly interested in automation and artificial intelligence, building systems that automate routine tasks for teams and organizations.
CEI, the collection effectiveness index, is the percentage of receivables that were collectible in a period that you actually collected. A score of 100 is perfect. It measures collection performance, where DSO measures how long cash takes to arrive.
CEI = (beginning receivables + credit sales – ending total receivables) / (beginning receivables + credit sales – ending current receivables) x 100. Use the same period for all four inputs, usually a month, and state your cutoff for current balances.
There’s no standard. Vendor guides range from about 80% to 90%, and CRF member medians sit near 79. Benchmark against your own history, industry and payment terms, and treat 100% as unrealistic.
Yes. With $1,000,000 beginning AR, $1,000,000 credit sales and $1,000,000 ending AR, both have the same DSO. If $900,000 is current, CEI is 90.9%. If only $500,000 is current, it’s 66.7%.
Reconcile beginning, ending total and ending current AR to your ledger, fix your current cutoff, and calculate CEI monthly alongside DSO. Then repeat it on each collector’s own portfolio to see where past-due money sits.
Collection effectiveness index shows what DSO hides. See the CEI formula, a worked example and how to use it to manage collectors in your AR team.
Process mining vs process discovery: see what each needs and delivers, and how your ERP and CRM logs can pick your first automation in two weeks.
Use this dunning letter sequence with templates for day 1, 7, 15, 30 and 45 to collect overdue invoices faster and keep the customer relationship intact.
Compare SYSPRO integration options for bank files, CRM and e-commerce, and learn how to connect them without touching your ERP core. Built for IT Directors.
ERP upgrade, cloud move, Power Apps extension or replacement? Compare costs and risks in one decision table and pick the right path for your on-prem ERP.
Legacy application modernization works best in phases. Learn how to decide rebuild, replace or retire for each app and move to .NET 8 and Azure safely.
Collection effectiveness index shows what DSO hides. See the CEI formula, a worked example and how to use it to manage collectors in your AR team.
Process mining vs process discovery: see what each needs and delivers, and how your ERP and CRM logs can pick your first automation in two weeks.
Use this dunning letter sequence with templates for day 1, 7, 15, 30 and 45 to collect overdue invoices faster and keep the customer relationship intact.
Compare SYSPRO integration options for bank files, CRM and e-commerce, and learn how to connect them without touching your ERP core. Built for IT Directors.
ERP upgrade, cloud move, Power Apps extension or replacement? Compare costs and risks in one decision table and pick the right path for your on-prem ERP.
Legacy application modernization works best in phases. Learn how to decide rebuild, replace or retire for each app and move to .NET 8 and Azure safely.
Earning Global Recognition: A Testament to Quality Work and Client Satisfaction. Our Business Thrives on Customer Partnership
Every quote comes from a published review on GoodFirms, Clutch or our own site. Click a source to read the full review.
Trustpilot5.0★★★★★See reviewsGoodFirms5.0★★★★★45 verified reviews
G25.0★★★★★See reviewsClutch5.0★★★★★Quality 5.0 · Schedule 4.8
Google4.7★★★★★Mohali office“QServices was highly professional, knowledgeable, and approachable. We continue to work with them on other projects.”
“Quality assurance is often overlooked, but these guys take that very seriously. … their team of experienced, dedicated developers and highly skilled engineers quickly dissected and decomposed every problem and presented solutions and options that directly met my needs”
Erik BrownBusiness owner and software engineerClient review“The supplier delivered the application on time and was responsive to our needs. He was also flexible, which allowed us to make changes on the fly.”
Zoltan BodnarCFO, Yusen LogisticsGoodFirms“Thank you Sahil and team for wonderful collaboration right from day 0. … Highly recommend the developers.”
Ranbeer MakinClientClient review“They are always looking for new ways to improve their products and services and to deliver value to their customers.”
“I have had an excellent experience working with QServices. We have a highly collaborative relationship and I value them not just as contractors but as partners.”
Alex VanderElsClientClient review“Sahil undertakes every project with a high degree of professionalism. His communication style is unmatched and he is always available to resolve issues or just discuss the project.”
Philmore J.ClientClient review“Responsive, patient and professional. Consistent weekly attention to our project, and new ideas we hadn't asked for.”
Michael WilliamsonPresident and CEO, United Way of Southeast LouisianaGoodFirms“I have been working with them on a project for a year now … They have been able to solve problems that come up with bugs or development and able to communicate well with me.”
Steven LewisClientClient review“We had been working on the app for two years. QServices built it in two months.”
Brian WallerPresident, Technology Association of IowaGoodFirms“All projects were delivered on time and were fully completed upon delivery.”
“They had excellent quality. The hypercare they provided after the project went live is exceptional.”
Founder and CEO
Chief Sales Officer
Thanks, we’ve got your details. A named member of our team will reply within one business day.
