Collection Effectiveness Index (CEI)
A percentage measure of how much of the receivables that were available to collect in a period actually got collected.
The collection effectiveness index (CEI) measures what fraction of collectible receivables a team actually collected in a period. It compares what was available to collect (beginning receivables plus the period's credit sales, minus ending total receivables) against what could ideally have been collected (the same, minus only the ending current receivables that were not yet due). A CEI of 100 percent means everything that was due got collected; anything below quantifies the shortfall.
CEI complements DSO rather than duplicating it. DSO is denominated in days and moves with sales volume, terms mix, and timing; CEI is denominated in percent of opportunity and isolates collection execution. A quarter with booming sales can show worsening DSO while CEI holds steady (the team collected what was due; there is simply more new AR), and a quarter of weak sales can flatter DSO while CEI reveals slippage. Tracked monthly by team, portfolio, or collector, CEI in the mid-90s and stable is the usual mark of a healthy B2B operation; sustained drift downward means past-due balances are compounding.
As a management tool CEI works best over shorter windows and at segment level, where it attributes performance fairly: a collector handling the litigation-bound accounts should be judged against that segment's realistic ceiling, not the house average. Its main limitation is that it says nothing about cost or customer experience, a team can buy CEI with scorched-earth tactics, so it belongs on a scorecard next to dispute cycle time, promise-kept rate, and customer complaints, not alone.
Formula
CEI = ((Beginning AR + Credit Sales - Ending Total AR) / (Beginning AR + Credit Sales - Ending Current AR)) x 100
Worked example
Beginning AR $5.0M, credit sales for the month $3.0M, ending total AR $5.2M, of which $4.0M is current (not yet due). CEI = ((5.0 + 3.0 - 5.2) / (5.0 + 3.0 - 4.0)) x 100 = (2.8 / 4.0) x 100 = 70%. The team collected 70% of what was actually available to collect, a number worth investigating regardless of what DSO did.
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