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DSO tells you how long collection takes, but it moves when sales volume changes, even if your collection process hasn't. The Collection Effectiveness Index focuses more directly on the question that matters: of everything that was collectible in a period, how much did you actually collect?
How it's calculated
CEI = (Beginning receivables + Credit sales for the period − Ending total receivables) ÷ (Beginning receivables + Credit sales for the period − Ending current receivables) × 100.
The top half is what you actually collected. The bottom half is what was collectible — everything owed, minus what isn't due yet. Our collection effectiveness index calculator does the math once you enter the four figures.
Reading the result
CEI is a percentage, and closer to 100% is better. 100% would mean you collected everything that was due during the period. A figure consistently in the 80s or 90s generally indicates an effective process; a falling CEI means an increasing share of due money is slipping past its due date uncollected.
Why use it alongside DSO
A strong sales month can make DSO look worse even when collection is working fine, because receivables rise with sales. CEI adjusts for that by comparing collections against what was actually due. Watching both gives a clearer picture: if DSO rises but CEI holds steady, the change is likely sales-driven; if both deteriorate together, collection itself is slipping.
Improving it
A low CEI points at the collection process specifically: follow-up that starts too late (see invoice follow-up), overdue invoices that don't get escalated (see overdue invoices), or disputes left unresolved (see invoice disputes). Fixing whichever of these is the bottleneck tends to move CEI within a period or two.
Track it monthly
Like most receivables metrics, a single CEI reading says less than the trend. Calculating it monthly, alongside your aging report, turns it into an early warning rather than a post-mortem.