Collection Effectiveness Index (CEI): How to Calculate It and Use It on an AR Team
DSO tells you how long cash takes. CEI tells you how much of what you could have collected, you did. The formula, a worked example, and how a 3 to 5 person AR team uses CEI each month and per collector.
Sia Ghazvinian
Co-Founder & CEO
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The collection effectiveness index (CEI) measures how much of the money you could have collected in a period you actually collected. It is expressed as a percentage, and a score near 100% means almost everything collectable came in. DSO tells you how long cash takes to arrive; CEI tells you whether your collections team got the cash that was there to get. That makes it the most direct scorecard for the collections function itself.
The stakes are high for any business selling on terms. The Atradius Payment Practices Barometer found that 43% of credit-based B2B sales in the US were overdue in 2025. When nearly half of invoiced sales run late, the question for a controller is not only "how late?" but "how much of it did we bring in this month, and who on the team is falling behind?"
This guide is for the controller or AR manager running a collections team of three to five people across hundreds of open invoices in NetSuite, Sage Intacct, Dynamics or QuickBooks Enterprise. It covers the formula, a worked example, what a good score looks like, how to track CEI per collector, and the habits that move it.
What Is the Collection Effectiveness Index?
CEI compares two numbers for the same period: what you collected, and what was available to collect. Available means everything owed at the start of the period plus new credit sales, minus whatever is still current (not yet due) at the end. Invoices that are not due yet are left out, so the team is not penalized for money nobody was supposed to chase.
The standard CEI formula
The version most finance teams use, as set out by AccountingTools, is:
CEI = (Beginning receivables + Credit sales for the period - Ending total receivables) / (Beginning receivables + Credit sales for the period - Ending current receivables) x 100
The top line is the amount collected. The bottom line is the amount that was collectable. Every input comes straight from two aging reports (the start and the end of the period) and the period's credit sales.
A simplified variant you will also see
Some guides use a shorter version. Allianz Trade's CEI guide, for example, divides the amount collected by beginning receivables plus credit sales, without removing current receivables. The two versions produce very different numbers from the same data, so pick one, write it down and never compare a score from one with a score from the other. The standard version is the fairer test of a collections team because it only counts money that was due.
How Do You Calculate CEI? A Worked Example
Take a distributor with a three-person AR team. The figures below are illustrative arithmetic for one month, not benchmarks.
Step 1: Pull the inputs
Beginning receivables (from the aging report on the first of the month): $1,200,000
Credit sales invoiced during the month: $900,000
Ending total receivables (aging report on the last day): $1,250,000
Ending current receivables (the "current" or not-yet-due column of that same report): $1,050,000
Step 2: Work out what was collected
$1,200,000 + $900,000 - $1,250,000 = $850,000 collected.
Step 3: Work out what was collectable
$1,200,000 + $900,000 - $1,050,000 = $1,050,000 collectable.
Step 4: Divide and multiply by 100
$850,000 / $1,050,000 x 100 = about 81%.
In plain terms, the team brought in about 81 cents of every collectable dollar. The remaining $200,000 is past due and still on the books, and that balance is the work list for next month.
Pull the inputs the same way every month
Run both aging reports on the same basis (by due date, not invoice date), at the same cutoff, and from the same system. Our guide to AR aging report analysis covers the monthly checks that keep those reports trustworthy before you build a metric on top of them.
What Is a Good CEI Score?
There is no single published benchmark that applies to every industry. AccountingTools describes a result near 100% as a sign of a very effective collections department, and most guides say the same thing in different words. Treat CEI as a trend you own, not a number you compare with strangers.
Working ranges many teams use
As a starting point, many AR teams treat a monthly CEI above 80% as healthy, the high 80s and above as strong, and anything that drops into the 70s or below for two months running as a signal to look closer. Our list of accounts receivable KPIs worth tracking uses the same 80% line as its healthy signal. Set your own targets from your last twelve months of data and your customer mix.
Why industry matters
A contractor billing progress payments with retainage will read differently from a distributor selling on Net 30, just as DSO does. Our DSO benchmarks by industry show how far normal payment timing varies by sector. Compare your CEI with your own history first, then with peers who bill the same way.
How Is CEI Different From DSO?
DSO and CEI answer different questions, and a team needs both. DSO is driven by sales volume and terms as well as collections, so it can improve when sales jump even if collections did not. CEI isolates the collections result. Our guide on how to calculate DSO covers the other side of the picture.
Metric | What it measures | What moves it most | Blind spot |
|---|---|---|---|
CEI | Share of collectable dollars collected in the period | Follow-up coverage, dispute speed, promise follow-through | Does not show how old the unpaid balance is |
DSO | Average days of sales sitting unpaid | Sales volume, payment terms, collections | Can improve when sales rise, even if collections did not |
Average days delinquent | Average days past the due date | Collections timing, dispute backlog | Hides which customers drive the average |
Percent of A/R past 60 days | Share of receivables at real risk | Escalation on older balances | Says nothing about this month's collections |
Read CEI next to the aging buckets, not instead of them. A strong CEI with a growing 90-plus bucket usually means the team is collecting easy, recent money and leaving the hard accounts to age.
How Should a 3 to 5 Person AR Team Use CEI?
A single company-wide CEI is a good monthly headline. It becomes a management tool when you split it.
Calculate CEI per collector
If each collector owns a portfolio of accounts, run the same formula on each portfolio. Each collector gets their own beginning receivables, credit sales, ending total and ending current receivables. Per-collector CEI shows whose book is slipping before the company number moves. Our guide on how to structure a collections team of 3 to 5 people covers how to split portfolios so the comparison is fair.
Compare like with like
A collector who owns your largest enterprise accounts, with long AP approval chains, will often score lower than one who owns small accounts that pay by card. Compare each collector with their own last three months, and rebalance portfolios if one book is simply harder.
Track it monthly, check the drivers weekly
CEI is a period metric, so a monthly read is the natural rhythm. The drivers behind it can be checked every week: how many past-due accounts got a touch, how many promises came due, how many disputes are open. Our guide to prioritizing collections accounts lays out a weekly worklist built around exactly those drivers.
Segment by customer tier
Splitting CEI by customer size or risk tier shows where the dollars leak. Many teams find a high CEI on large accounts and a weak one on the long tail of small balances nobody has time to chase.
What Can Distort a CEI Score?
CEI is only as honest as the inputs behind it. Four things commonly bend it.
Write-offs and credit memos
The formula treats any drop in receivables as a collection. AccountingTools points out that write-offs also reduce receivables, so a month with heavy write-offs or credit memos can show a better CEI than the cash in the bank supports. Exclude write-offs from the collected figure, or report them on the line next to CEI.
Unapplied cash
Payments received but not matched to invoices leave receivables looking higher than they are, which pulls CEI down for the wrong reason. Clearing it before month-end matters; our guide to unapplied cash covers the weekly routine.
Disputed invoices
An invoice in dispute is technically past due but cannot be collected until the dispute is resolved. Some teams report CEI with and without disputed balances so a single large dispute does not hide good work elsewhere. Our invoice dispute workflow covers how to close them faster.
One large payment
On a small book, one customer paying a large balance early or late can swing CEI by several points. Look at a three-month rolling average before reacting to a single month.
How Do You Improve Your Collection Effectiveness Index?
CEI rises when more of the past-due book gets timely, specific follow-up, and when the things blocking payment get cleared. For most teams the biggest lever is coverage: every past-due account touched every week, not only the largest ones.
Touch every past-due account on a schedule
Accounts that get no contact are the ones that age. A written follow-up cadence by days past due, applied to every account, closes the gap between the accounts a team has time for and the accounts that are owed.
Follow up on every promise to pay
A promise with a date and an amount is the most collectable money on the book, and a missed one is the clearest signal to call again. Our guide to promise to pay tracking covers how to log promises and act the day after one breaks.
Fix the billing contact before chasing harder
Many past-due invoices are unpaid because they went to the wrong person. Keeping the right AP contact on every account, covered in our guide to billing contact data, raises CEI without a single extra call.
Free collectors for the hard accounts
When routine reminders take most of the week, the disputes and key accounts that decide the score get the least time. Our guide to lowering DSO without hiring covers how teams shift routine follow-up off collectors' plates.
Where Does Abivo Fit?
Abivo's AI collections agent, Kate, handles routine follow-up on overdue invoices so every past-due account gets a timely touch and your collectors spend their week on the accounts that move the score. Kate does not calculate CEI or change your reports; your aging reports and accounting system stay the source of truth. What she changes is the coverage behind the number:
Calls, texts and emails go out from your accounting system data, so the follow-up matches what the customer actually owes.
One message can cover all open invoices on an account, with details such as job, site, PO or billing period.
Disputes and promises are recorded, so collectors see which accounts have a dated commitment and which need a person.
Follow-up can be paused on one invoice while a dispute is worked, and the rest of the account keeps moving.
Sensitive accounts can be flagged so replies go straight to a named owner on your team.
OFS Group went from four collectors to one with Abivo, recovered $842,518 in four months and cut DSO by more than 30 days; the full story is in the OFS Group case study. For a wider view of the category, see our guide to the best AI accounts receivable software.
Practical Takeaways for Controllers and AR Managers
Use the standard formula, which removes current receivables from the denominator, and write it down.
Pull both aging reports the same way every month: same cutoff, same system, by due date.
Treat CEI as a trend, with 80% as a common working floor and your own history as the real benchmark.
Read CEI next to the aging buckets, so a high score cannot hide a growing 90-plus balance.
Calculate CEI per collector and compare each person with their own last three months.
Strip out write-offs and credit memos, and report disputed balances separately.
Raise the score with coverage: every past-due account, every week, every promise followed up.
Frequently Asked Questions
What is the collection effectiveness index?
The collection effectiveness index (CEI) is a percentage that shows how much of the money available to collect in a period was actually collected. A score near 100% means almost all collectable receivables came in during the period.
What is the formula for CEI?
CEI = (Beginning receivables + Credit sales - Ending total receivables) / (Beginning receivables + Credit sales - Ending current receivables) x 100. The top line is what was collected; the bottom line is what was collectable, excluding invoices that are not yet due.
What is a good collection effectiveness index?
There is no universal published benchmark. Many AR teams treat a monthly CEI above 80% as healthy and the high 80s or above as strong. The most useful comparison is your own trend over the last twelve months, by customer tier and by collector.
Is CEI better than DSO?
Neither replaces the other. DSO shows how long cash takes to arrive and is affected by sales volume and terms. CEI isolates how well the collections team collected what was due. Most controllers track both, alongside the aging buckets.
How often should you calculate CEI?
Monthly for the headline number, using the month-start and month-end aging reports. Many teams also run it per collector and look at a three-month rolling average to smooth out single large payments.
Ready to see how an AI collections agent keeps every past-due account moving? Get started with Abivo.
Curious what this sounds like in practice? Here's a 98-second sample call: https://abivocollection.com/#live-demo
