Calculate collection percentage from the amount collected and total billed, or find the amount collected, total billed or cash needed for a target rate.

Use the same invoices and period as the amount collected.

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Collection Percentage Formula

The following formula gives a simple gross collection percentage. Match the invoice group, period and currency for collections and billed amounts; timing differences, prepayments and credits can otherwise distort comparisons.

P = (C / T) × 100

Variables:

  • P is the collection percentage
  • C is the amount collected
  • T is the total amount billed

To calculate the collection percentage, divide the amount collected by the total amount billed and multiply the result by 100 to get the percentage.

What is Collection Percentage?

Collection percentage is a financial metric used to measure the efficiency of a company’s billing and collection processes. It represents the proportion of the total amount billed that has been successfully collected. A higher collection percentage indicates a more effective collection process, while a lower percentage may suggest issues with billing accuracy or collection efforts. This metric is crucial for businesses to ensure they are receiving the revenue they are owed and to identify areas for improvement in their financial operations.

How to Calculate Collection Percentage?

The following steps outline how to calculate the Collection Percentage.

  1. First, determine the amount collected (C).
  2. Next, determine the total amount billed (T).
  3. Finally, calculate the collection percentage using the formula P = (C / T) * 100.
  4. After inserting the values and calculating the result, check your answer with the calculator above.

Example Problem : 

Use the following variables as an example problem to test your knowledge.

Amount collected (C) = $5000

Total amount billed (T) = $10000