Collection Effectiveness Index
Also called: CEI
What is Collection Effectiveness Index?
The collection effectiveness index, or CEI, measures how much of what could have been collected in a period was actually collected, expressed as a percentage — so a falling sales month cannot flatter it the way it can flatter days sales outstanding.
A worked example
Opening receivables ₹8,40,000, credit sales for the month ₹12,00,000, closing receivables ₹9,60,000 of which ₹7,20,000 is still within terms.
- Collected: 8,40,000 + 12,00,000 − 9,60,000 = ₹10,80,000
- Collectable: 8,40,000 + 12,00,000 − 7,20,000 = ₹13,20,000
- CEI = 10,80,000 ÷ 13,20,000 × 100 = 81.8%
How to read it
High eighties and above generally indicates a book being worked on a schedule. Figures in the sixties usually mean collections run on memory rather than a process. Because the measure is bounded at 100%, the trend across months is more informative than any single reading.
Why not just use DSO
Days sales outstanding falls when sales fall, even if collections got worse, because the denominator shrinks. CEI compares collections against what was collectable in the same period, so it isolates collections performance from sales performance. Tracking both together is the point: DSO tells you how long money takes, CEI tells you whether anyone is chasing it.
Frequently asked questions
Above roughly 80% is workmanlike for a small business and the high eighties is strong, but the comparison that matters is against your own previous months rather than a published benchmark.