Calculator
Enter invoice-level values, choose denominator rules, then submit. The result appears above this form after calculation.
Example data table
This sample mirrors typical contract billing, partial payments, and adjustments.
| Invoice date | Invoice # | Customer | Billed | Collected | Credits | Discounts | Taxes | Write-offs |
|---|---|---|---|---|---|---|---|---|
| 2026-01-05 | INV-1001 | Atlas Supply | 12,500.00 | 9,800.00 | 0.00 | 200.00 | 650.00 | 0.00 |
| 2026-01-19 | INV-1002 | Northbridge Labs | 7,800.00 | 7,800.00 | 0.00 | 0.00 | 405.00 | 0.00 |
| 2026-02-02 | INV-1003 | Cedar & Co | 6,400.00 | 3,200.00 | 150.00 | 0.00 | 332.00 | 400.00 |
Use “Load example data” to populate the calculator instantly.
Formula used
Collection Rate (%) = Numerator ÷ Denominator × 100
- Numerator: collected amounts, plus optional write-offs.
- Denominator: gross billed, or net billed (billed − credits − discounts).
- Taxes can be included or excluded from the denominator.
- Contracts may define “billed” as net of credits and discounts.
- Some teams treat write-offs as “resolved,” improving visibility.
- Tax treatment varies by jurisdiction and invoicing practice.
- Keep the same basis across reporting periods for comparability.
How to use this calculator
- Choose your denominator basis to match contract definitions.
- Decide whether taxes should be excluded from the denominator.
- Enter invoice rows with billed and collected amounts.
- Add credits, discounts, taxes, and write-offs if applicable.
- Click Submit to view results above the form.
- Use CSV or PDF export for audit trails and reporting.
Collection rate as a contract health signal
Invoice collection rate measures how much billed value converts into cash within a period. For contract portfolios, it highlights payment friction, disputed milestones, and billing leakage. Track it monthly by customer, service line, and contract type to spot weak clauses and recurring approval delays before they affect working capital. Pair the metric with aging buckets to see whether issues are new, chronic, or seasonal.
Using net versus gross billed bases
Gross billed reflects the face value of invoices issued. Net billed adjusts for credits and discounts that reduce enforceable consideration. If your agreements allow post‑delivery adjustments, net billing aligns reporting to the contractual amount due. Keep a consistent basis across periods to avoid misleading improvements caused by credit timing. For retainers, consider separating refundable deposits from earned fees to prevent denominator overstatement.
Tax, write‑offs, and policy consistency
Taxes may be collected and remitted, but they can distort performance if included in the denominator for jurisdictions where tax is not revenue. Excluding taxes improves comparability across regions and pricing models. Write‑offs are optional in the numerator when you want a “resolved” view; document criteria so teams do not inflate performance by reclassifying overdue balances. Review write‑offs with legal to confirm waiver language and limitation periods.
Interpreting results and setting targets
A rising rate paired with stable billing indicates healthier cash realization. A flat rate with growing billed totals can still strain liquidity because outstanding balances expand. Use targets by segment: higher for prepaid or short‑term contracts, lower for enterprise milestones. Combine this rate with days sales outstanding to validate collection capacity. If your rate is strong but DSO worsens, investigate invoice batching, payment terms, and approval routing.
Operational actions driven by the dashboard
When the rate drops, review invoices with partial collections, high credits, or repeated discounts. Tighten acceptance language, require sign‑offs before billing, and add late‑fee or suspension terms where appropriate. Improve invoice accuracy with itemized scopes, tax codes, and reference to purchase orders. Export CSV for audit trails and PDF summaries for stakeholders, then track interventions in the next reporting cycle and compare before‑and‑after rates. Align finance, legal, and operations decisions quickly.
FAQs
What does invoice collection rate represent?
It shows the percentage of billed value converted to cash during the selected period, based on your chosen denominator rules. It helps quantify payment execution across contracts and customers.
Should I use gross or net billed?
Use gross when contracts treat the invoice face value as due. Use net when credits and discounts are expected adjustments and you want the collectible amount as the baseline.
Why would I exclude taxes from the denominator?
Taxes are often pass‑through amounts rather than revenue. Excluding them makes rates comparable across jurisdictions and prevents tax-heavy invoices from depressing performance.
When should write-offs be included in the numerator?
Include write-offs when reporting a resolved outcome view, such as closed periods or portfolio cleanup. Exclude them when you want a pure cash realization measure for collections teams.
Can I calculate by milestone or customer segment?
Yes. Enter milestone invoices as separate rows, or filter and run the calculator for each customer, contract type, or region. Compare rates across segments to prioritize process fixes.
How should I use the exports?
CSV supports audits and pivot analysis, while PDF provides a portable summary for stakeholders. Save exports with the period label and policy settings to maintain consistent reporting history.