Collections effectiveness index calculator

How to use this calculator?

This CEI calculator determines a finance team’s CEI, a measurement that shows how much was collected from a pool of all available accounts receivables which indicates the effectiveness of a team’s collections process.

• Beginning receivables: A businesses open receivables at the start of the month.
• Ending total receivables: The total of open receivables including current and overdue receivables at the end of the month.
• Ending current receivables: The number of open receivables that are not overdue.
• Monthly credit sales: The sales made by extending credit in that month.

What is CEI?

CEI is the calculation of a company’s ability to collect payment from customers. The benefit of CEI is that it’s an effective measure at shorter intervals (weekly/monthly), while DSO is more accurate with a volume of data feeding it. DSO is more useful at quarterly, semi-annual, or annual intervals, with CEI used in the interim.

How to improve your CEI?

Evaluate and align your accounts receivable team, tools and protocols with the company’s AR goals to improve your collections process.

Understanding CEI allows businesses to identify potential inefficiencies in their current process, this can be improved by looking at:

• Credit Policy – Look at how your company determines creditworthiness, terms and conditions for making sales and agreements.
• Invoicing – Define a clear process for sending and following up on invoices, look to automate your tasks to improve efficiency.
• Data management – Mitigate the chance of human error with technology automatically inputting data and recording tasks.
• Payment communications - Flexible payment options mean your customers have control over how, when and where they pay. Resulting in more prompt and on time payments.

Download our Ultimate AR Collections Benchmarks Report to learn more tips on how to improve your Bad Debt to Sales Ratio and every other key metric you’ll need to become a revenue hero. You can also book a consultation with one of our AR experts to discover the power of Smart AR and you could reduce your DSO by 30% on average.