Last reviewed 13 August 2026
Work out your collection efficiency, also called the Collection Effectiveness Index, from four figures you already have. See the arithmetic, your sector benchmark and the exact amount you left overdue.
Collection efficiency, measured as the Collection Effectiveness Index (CEI), is the percentage of the receivables you could have collected in a period that you actually collected.
CEI = (Amount Collected ÷ Amount Available to Collect) × 100
Example: beginning AR $150,000, credit sales $200,000, ending total AR $180,000, of which $140,000 is still within terms. Collected = 150,000 + 200,000 - 180,000 = $170,000. Available = 150,000 + 200,000 - 140,000 = $210,000. So 170,000 ÷ 210,000 × 100 = 81.0 percent.
Standard CEI needs the aging split at period end. If you only know what was billed and what arrived, use the collection ratio.
Enter a beginning balance of zero or more.
Enter credit sales above zero.
Ending AR cannot be more than beginning AR plus credit sales.
Receivables within terms cannot be more than ending total AR.
The stricter measure used by lenders, property managers and subscription billers. Everything billed counts, whether or not it has reached its due date.
Enter an amount due above zero.
Collected cannot be more than the amount due.
Enter a benchmark between 1 and 100.
These change with your score and with the gap to your sector benchmark.
Key takeaways
Your CEI
81.0%
Good performance, 80 to 89 percent
Just under the professional services benchmark.
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Collection efficiency answers one question: of everything you had a right to collect this period, how much did you actually bank?
The metric has two names and they mean the same thing. CEI stands for Collection Effectiveness Index, and the same calculation appears as collection efficiency, collection effectiveness index, collections effectiveness index or collection efficiency index. Credit controllers say efficiency, accounting software says effectiveness.
This page uses both, because a benchmark published under either name is directly comparable.
The denominator is what sets CEI apart. DSO divides receivables by sales, so it moves whenever your sales mix moves. CEI divides what you collected by what was collectable, so sales volume cancels out.
Double the invoices with the same discipline returns roughly the same CEI. That is why it is the cleanest read on whether the collections process itself is working.
Three groups care, for three reasons:
The one line version. Add what you started with to what you invoiced, take off what is left. That is what you collected. Do the sum again but only take off the invoices that are not due yet, and that is what you could have collected. Divide the first by the second.
Written out in full, the short form above becomes:
CEI = [(Beginning AR + Credit Sales - Ending Total AR) ÷ (Beginning AR + Credit Sales - Ending Current AR)] × 100
Four inputs, and each one has a specific definition that people get wrong in a specific way.
Total receivables on the first day of the period, current and overdue together. Take it from the same aging report you will use at period end, so the two figures are built the same way.
Only invoices raised on credit terms during the period. Cash and card sales never entered receivables, so including them flatters the result. Exclude credit notes and returns as well.
Everything still outstanding on the last day, including balances that are months overdue. Subtracting this from the opening balance plus credit sales gives you cash actually collected in the period.
The slice of that closing balance that is not yet due. This input is what turns a collection rate into a collection effectiveness measure. An invoice raised yesterday on net 30 was never collectable this period, so it should not count against you.
The ratio is expressed as a percentage. Standard CEI cannot exceed 100 percent, so a result above it always means an input is wrong rather than a month that went unusually well.
A manufacturer opens the month with $150,000 in receivables and invoices $200,000 on credit. At month end $180,000 is still outstanding, and the aging report shows $140,000 of that is not yet due.
The gap in your CEI is not an abstraction. The difference between $210,000 available and $170,000 collected is $40,000, which is exactly ending total AR minus ending current AR: the overdue balance on your aging report, to the dollar. That identity holds every time, so use it to check the calculation.
The formula works on any period. A technology services business opens the quarter with $75,000 in receivables, bills $300,000 on credit, and closes with $95,000 outstanding, $85,000 of it inside terms.
Only $10,000 sat overdue at quarter end. That is what subscription billing with cards on file looks like.
CEI is banded, and the bands are tighter than most people expect. The distance from adequate to good is ten points, so a two point move month on month is a real signal rather than noise.
Excellent
90 percent and above
Almost everything collectable was collected. Protect the process, do not tinker.
Good
80 to 89 percent
Normal for business to business selling on terms. Work the tail, not the whole ledger.
Collections gap
70 to 79 percent
Roughly a quarter of what was collectable slipped. Chasing is inconsistent.
Critical
Below 70 percent
Overdue balances are compounding and bad debt risk is rising with them.
Read the trend before the band. A business at 74 percent climbing two points a month has a working process; one at 84 percent falling two points a month does not, and it will cross into the collections gap band inside a quarter.
| Sector | Typical CEI | Range | Why |
|---|---|---|---|
| Technology and SaaS | 87.5% | 85 to 90% | Card and direct debit billing, short terms |
| Retail | 87.5% | 85 to 90% | Most revenue settles at the point of sale |
| Professional services | 82.5% | 80 to 85% | Milestone billing, slow client approvals |
| Financial services | 82.5% | 80 to 85% | Scheduled debits, tight credit control |
| Manufacturing | 77.5% | 75 to 80% | Large invoice values, negotiated terms |
| Distribution and wholesale | 77.5% | 75 to 80% | Trade credit is part of the offer |
| Transportation and logistics | 77.5% | 75 to 80% | High invoice volume, frequent short pays |
| Healthcare | 72.5% | 70 to 75% | Payer processing sits outside your control |
| Real estate | 70% | 65 to 75% | Lumpy balances, long settlement dates |
| Construction | 67.5% | 65 to 70% | Retentions, progress claims and disputes |
Ranges compiled from published credit management and working capital literature, including material from APQC, the National Association of Credit Management, the Credit Research Foundation and The Hackett Group. Compiled figures, reviewed August 2026, for orientation only rather than as sourced survey results. Payment terms move CEI more than sector does, so treat a peer on the same terms as a better comparison than the row above.
Terms distort every benchmark. Move from net 30 to net 60 and change nothing else, and CEI rises, because invoices that were overdue at month end are now still within terms. A rising CEI immediately after a terms change is arithmetic, not improvement.
Standard CEI needs an aging split at period end. Plenty of businesses do not have one to hand, which is why the simpler collection ratio exists.
| Method | Formula | Best for | Weakness |
|---|---|---|---|
| Standard CEI | (Collected ÷ Available) × 100 using the aging split | Monthly credit control reporting, board packs, lender reviews | Needs a clean current versus overdue split at period end |
| Collection ratio | (Amount Collected ÷ Amount Due) × 100 | Lenders, property managers, subscription billing, anywhere the schedule is known | Counts invoices that were never due yet, so it reads lower than CEI |
Banks and non bank lenders run the ratio version on scheduled repayments: total collected in the month over total due in the month.
Watch for the variant that adds arrears recovered from earlier months into the numerator but not the denominator, which can report above 100 percent. It is a legitimate portfolio measure, but it is not comparable with a CEI figure. Check which definition a number was built on before you put two side by side.
Only some of these are collections failures. Diagnose before you act.
Paidnice pulls the beginning balance, credit sales and closing balances straight from your ledger, so CEI is there without the manual pull.
See AR reportingCEI improves when the overdue bucket shrinks, and the overdue bucket shrinks when chasing happens on a schedule instead of on a memory.
Most of that list is repetition on a timetable, which is what software is for. Automated email and SMS reminders go out before and after the due date without anybody scheduling them, and customer statements run on a cycle.
Payment plans turn a stuck balance into scheduled installments. AR reporting keeps the current versus overdue split in front of you, which is the split CEI is built from.
Put beginning AR in A2, credit sales in B2, ending total AR in C2 and ending current AR in D2.
=(A2+B2-C2)/(A2+B2-D2)=((A2+B2-C2)/(A2+B2-D2))*100=A2+B2-C2=A2+B2-D2=C2-D2: =(A2+B2-D2)-(A2+B2-C2)=E2/F2=IF((A2+B2-D2)<=0,"",(A2+B2-C2)/(A2+B2-D2))Copy the row down one line per month and chart the column. A single CEI reading is close to useless; twelve of them tell you whether the process is holding.
Collection efficiency answers how well. The neighboring metrics answer how long, how often and how bad, and they are diagnostic together in a way none of them is alone.
| Metric | Question it answers | Unit |
|---|---|---|
| Collection efficiency (CEI) | How much of what was collectable did we collect | Percent |
| DSO | How many days until we get paid | Days |
| AR turnover | How many times receivables convert per year | Ratio |
| AR aging | Which balances are late, and by how far | Buckets |
| Bad debt expense | How much of the ledger will never arrive | Currency |
| Cash conversion cycle | Total days from paying suppliers to banking cash | Days |
The most useful pairing is CEI with DSO. DSO up and CEI flat means your terms or your customer mix changed, and collections are doing their job. DSO up and CEI down means the process slipped. DSO down and CEI down is the awkward one: you are collecting the easy money faster while the difficult balances quietly age.
Sanity check before you report it. Amount available minus amount collected should equal ending total AR minus ending current AR. If those two do not match, one of your four inputs came from a different date or a different report.
CEI is defined consistently across credit management bodies, benchmarking organizations and ERP documentation. These are the primary references behind the formula, the bands and the sector ranges on this page.
External sources are cited for the definition and the benchmark ranges only. Figures on this page are computed from your own inputs. Reviewed August 2026.
Collection efficiency is measured with the Collection Effectiveness Index. CEI = (Amount Collected divided by Amount Available to Collect) times 100. Written out in full, CEI = [(Beginning AR + Monthly Credit Sales - Ending Total AR) / (Beginning AR + Monthly Credit Sales - Ending Current AR)] times 100. The result is the percentage of what you could have collected in the period that you actually banked.
Take your opening receivables balance, add credit sales for the period, then subtract closing total receivables. That is the amount you collected. Repeat the sum but subtract only the receivables still inside terms at period end. That is the amount available to collect. Divide the first by the second and multiply by 100. A CEI of 81 percent means you collected 81 percent of what was collectable.
Yes. CEI stands for Collection Effectiveness Index, and finance teams use collection efficiency, collection effectiveness index and collection efficiency index for the same measure. Accounting textbooks and software vendors favor effectiveness, while credit controllers usually say efficiency. Both names describe the same calculation and the same percentage result, so a benchmark quoted under either name is comparable.
Above 90 percent is excellent and rare outside subscription billing. From 80 to 89 percent is solid performance for most business to business sellers. From 70 to 79 percent means a real collections gap that is worth working on. Below 70 percent usually means invoices are not being chased on a schedule. Always compare against businesses on similar payment terms.
One, take receivables at the start of the period. Two, add credit sales made during the period. Three, subtract total receivables at the end to get the amount collected. Four, go back to step two and subtract only receivables still within terms to get the amount available. Five, divide the amount collected by the amount available and multiply by 100.
Put beginning AR in A2, credit sales in B2, ending total AR in C2 and ending current AR in D2. Enter =(A2+B2-C2)/(A2+B2-D2) in E2 and format the cell as a percentage. If you prefer the number as a plain figure, use =((A2+B2-C2)/(A2+B2-D2))*100. Copy the row down to build a monthly trend.
The simple ratio is Amount Collected divided by Amount Due, times 100. Lenders, property managers and subscription billers use it because they know exactly what was billed and what arrived. It is easier to run than CEI but it is stricter, since everything billed counts against you whether or not it has reached its due date yet.
Banks and lenders measure collection efficiency on scheduled repayments rather than invoices. Collection efficiency equals total amount collected in the month divided by total amount due in the month, times 100. Some lenders report a variant that includes arrears collected from earlier months in the numerator, which can push the figure above 100 percent, so check the definition before comparing two lenders.
No. The standard CEI cannot exceed 100 percent, because the amount available to collect always includes everything you could have collected. A result above 100 percent means an input is wrong, usually receivables within terms entered higher than total ending receivables, or credit sales that include cash sales. Check those two figures first.
CEI measures how much of the collectable balance you actually collected, as a percentage. DSO measures how long you waited to get paid, in days. CEI judges the collections process, DSO judges the outcome including your payment terms. Read them together: DSO rising while CEI holds steady points at longer terms, both moving against you points at collections.
Monthly. CEI is designed around a period opening balance, period credit sales and a period closing aging split, so a month is the natural unit and it reacts fast enough to show whether a change worked. Quarterly is acceptable for stable businesses. Once a year hides the trend, which is the part that matters most.
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