Collection Effectiveness Index (CEI)

CMA’s current poll “What methods do you use to measure receivables?” is receiving lots of write-ins for the CEI from Credit Research Foundation (CRF) http://poll.fm/27h9q

From the CRF:

Collection Effectiveness Index (CEI)

Definition: This percentage expresses the effectiveness of collection efforts over time. The closer to 100 percent, the more effective the collection effort. It is a measure of the quality of collection of receivables, not of time.

Formula:

Beginning Receivables + (Credit Sales/N*) – Ending Total Receivables
Beginning Receivables + (Credit Sales/N*) – Ending Current Receivables
X 100
*N = Number of Months or Days

CRF has a great article Performance Measures for Credit, Collections and Accounts Receivable that describes the major measurements and their purpose with formulas.