Recovery rate
The recovery rate is the share of an overdue debt amount that was actually collected over a given period.
How it is calculated
The basic formula is simple: the amount collected divided by the debt amount placed into collection, multiplied by 100%.
An illustrative example: debts worth 1,000,000 were placed into work, and 180,000 was collected over three months. The recovery rate for that period is 18%.
The details need to be agreed in advance. Is the base the principal only or the full amount with fees? Which period is used? Are payments that would have arrived anyway counted? Without shared rules, figures from different teams and months cannot be compared.
Why it matters
It is the main money result of collection. Calls, messages and promises are activity. The recovery rate shows how much actually came back.
It also drives decisions. By comparing recovery across stages, segments, agents and agencies, a manager sees where the work pays for itself and where a portfolio is better sold or placed elsewhere.
What to do
Measure recovery by cohort, comparing debts that became overdue in the same month. That way new inflows do not distort the result.
Look at the cost of collection alongside it. A high recovery rate bought with expensive staff and field visits may turn out to be unprofitable.
A common mistake is to judge a team only by the amount collected in a month. Agents then pick the easy accounts and the difficult ones are left untouched. Complement the recovery rate with roll rate and the share of kept promises.
More in Signals
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- What a messenger sales team really costs and where it loses moneyA sales team in messengers costs more than salaries: money also leaks out through seven channels. These are slow replies, abandoned conversations, forgotten follow-ups, a sales rep leaving with the client base, blocked numbers, broadcasts with no result and broken payment promises. Each leak can be sized on your own numbers: lost conversations times your close rate times your average deal.