The success of a company’s collections activities is often judged by a key performance indicator called Collection Effectiveness Index or CEI. This metric measures the accounts receivable team’s speed and efficiency in retrieving payments on overdue invoices, thereby reducing outstanding balances, defaults, and bad debt. A leading CEI means you’re converting overdue receivables into cash faster, creating more working capital to help buffer your company against financial risk.
Ready to accelerate your AR operations with this metric? Billtrust’s automated collections software now provides CEI insights inside our enhanced Collections Analytics Dashboard. Here’s a look at the new capabilities and features.
CEI Analytics: The New Automated Collections Software Dashboard
- Gain granular visibility into CEI and Average Days Delinquent (ADD) metrics
- Dive deeper into CEI and ADD metrics – you can even see them based on each portfolio, buyer, and collector
- Mitigate risk and surface opportunity with analytics that leverage cross-product data flow, including inputs from cash application and payment transactions
Learn more about Billtrust’s collections capabilities here
Client Benefits: Shifting the Focus from Buyers to AR Teams
This new level of visibility is giving finance leaders a clearer view of their collections team’s performance, particularly when compared to other metrics. For instance, payment metrics simply report how long it takes buyers to pay their bills. By putting the right emphasis on the right measurement, CEI shifts the managerial focus from buyer behaviors to AR activities and operational efficiency. That shift is the pivot many CFOs need to take their collections performance from good to great.
Shifting from payment metrics to CEI helps collections teams go from good to great.
On average, Billtrust clients see a 10- to 15-point lift in their CEI every year, achieving high ratings (like 80-85) in years two and three. This is often accompanied by an 80% productivity gain, thanks to Billtrust’s automated collections software. With predictive analytics prioritizing collections efforts and expedited workflows driving more efficient dispute resolutions, AR teams can collect payments faster and turn receivables into cash flow. Plus, real-time payments data flows across the Billtrust AR platform into the hands of collectors, so everyone is working with sharp information accuracy.
How CEI Works and How it Compares to Other Metrics
The CEI calculation works by comparing the amount of receivables collected to the total amount of receivables available for collection. The higher your score the better.
Learn how to calculate CEI in this guide
CEI is considered a superior measurement in Collections when compared to Days Sales Outstanding because CEI indicates collections performance, whereas DSO focuses on timing. Much like Average Collection Period (ACP), it’s considered a critical metric because it allows finance leaders to track performance during a specific time period. ACP is typically calculated on an annual basis, whereas CEI can easily be calculated on a monthly basis. That granularity offers a great way for AR teams to understand month-over-month performance trends, so they can pinpoint challenges and guide strategic improvements.
The median CEI in 2024 was 85.42. How does yours compare?
Why Now? 2025 Calls for a Stronger Command of Collections
Trends in bad debt haven’t been moving in the right direction. Last year, write-offs doubled, totaling $20.00 per $100,000.00 of sales. With 82% of financial decision-makers anticipating a recession over the next 12 months, we could see defaults rise much higher in 2025 and 2026. Performance improvement strategies for collections teams are increasingly urgent. Consider that credit losses peaked at 250% during the 2008 recession, and downturns can last 18-24 months or more.
These are reasons why many CFOs are taking a harder look at AR operations, tools, and AI solutions today – these are increasingly viewed as the primary means for counteracting economic volatility. A Q1 2025 study of financial decision-makers shows that despite budget cuts and more conservative approaches to cash management, investments in AI are going unaffected in the field of AR. In fact, 67% of financial leaders are dedicating over 10% of their 2025 budget to AI technologies with 83% reporting that AI has helped them better manage financial risk in 2025.
Get the CFO’s Guide to Financial Stability
CFOs will increasingly seek to reduce delinquency as part of a broader risk management strategy that aims to strengthen financial positions through cash reserves and cash flow restructuring. The Collections Efficiency Index offers a concrete metric for evaluating and improving recovery rates. Coupled with AI-automated collections software, businesses can leverage advanced technologies to optimize their collections procedures and maintain stability amidst economic volatility. Now is the time to act – proactive approaches are far more effective in mitigating risk.
FAQ
The Collection Effectiveness Index (CEI) is a key performance indicator that measures the speed and efficiency of a company's accounts receivable team in retrieving payments on overdue invoices.
Billtrust's automated collections software provides CEI insights through its Collections Analytics Dashboard, helping AR teams prioritize collections efforts and expedite workflows.
CEI indicates performance, whereas DSO focuses on timing. CEI allows finance leaders to track performance during specific time periods, offering better insights into month-over-month trends.