Contractor Finance Glossary
What is Collection Rate?
Definition reviewed . Source observations retain their stated periods.
Also called: cash collection rate, 30-day collection rate
A cohort collection rate is the share of a defined invoice group collected within a specified window. A period cash-to-billing ratio is a different measure and can exceed 100%.
For invoices issued in one month, ask how much of that original invoice cohort was collected within 30 days of each invoice date. This measures post-invoice collections. Billing speed measures delay before invoices exist, so the two controls work together.
A falling cohort rate calls for invoice-aging, credits, disputes and payment-allocation review. Record the treatment of retainage, voids, credits and partial payments; do not change the denominator mid-comparison. A period cash-to-billing ratio can rise above 100% when collections include older invoices.
For practice finances, AAFP defines adjusted collection rate as payments net of credits divided by charges net of approved contractual adjustments for a stated period. It is a different denominator from raw billed revenue or a 30-day invoice cohort; match the eligible services, adjustments and cash cutoff before comparing.
How it is calculated
30-day cohort collection rate = cash applied within 30 days of each invoice date to eligible invoices issued in the chosen month divided by that same eligible invoice cohort's billed amount. Period cash-to-billing ratio = cash collected during a period divided by invoices issued during that period; label it separately. The Level Index collection-rate median is 85.1% (n=464 contractors analyzed, overall research window 2022-2026). Its public definition does not establish a 30-day cohort, cutoff or retainage convention, so it is not a direct benchmark for the cohort formula above.
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