# Ratio - Collection Effectiveness Index (CEI)

COLLECTION EFFECTIVENESS INDEX (CEI):                                                                            Online CEI Ratio Calculator

Collection Effectiveness Index compares ‘what was collected’ out of ‘what was available to collect’ in a given period of time. The closer the CEI is to 100% the higher is the degree of collection effectiveness. In broader terms CEI accesses the percentage of open receivables a credit granting organization is able to recover/resolve/negotiate/accomplish within a specific period of time.

Formula for a given period:

Beginning Receivables + Monthly Credit Sales - Ending Total Receivables  X 100

Beginning Receivables + Monthly Credit Sales  - Ending Current Receivables

Where    Monthly Credit Sales = Credit Sales/N

Where    N = Number of Months

Formula for a 1 year period:

Beginning Receivables + (Credit Sales) - Ending Total Receivables  X 100

Beginning Receivables + (Credit Sales) - Ending Current Receivables

 Illustration: CEI Calculation Sample ATB Sales A/R Current 31-60 61-90 90+ (on Credit terms) Balance Jan 3,390 6,200 3,345 1,795 1,000 60 Feb 3,610 6,000 3,560 1,550 825 65 Mar 3,890 6,340 3,590 1,800 900 50 Total (Jan-Mar) 10,890

CEI for the period Jan to March (3 Months):

Period = N = 3 months = 3

Credit Sales = 10,890

Beginning Receivables = 6,200

Ending Total Receivables = 6,340

Ending Current Receivables = 3,590

CEI = 55.9%