Roll rate
Roll rate is the share of debts that moved from one delinquency bucket into the next, deeper one over a given period.
How it is calculated
A portfolio is split into buckets by days past due, for example 1–30, 31–60 and 61–90 days. Roll rate shows how many debts from one bucket ended up in the next one a month later.
The formula: the number (or amount) of debts that moved from the 1–30 bucket into the 31–60 bucket, divided by the number (or amount) of debts in the 1–30 bucket at the start of the period.
An illustrative example: at the start of the month the 1–30 bucket held 1,000 contracts. A month later 250 of them were in the 31–60 bucket. The roll rate is 25%.
Why it matters
It is an early signal. The amount collected describes the past. Roll rate describes what will happen to the portfolio in a month or two. If the roll rate out of the first bucket is rising, deep delinquency will soon rise too, and with it costs and write-offs.
It is also a convenient way to compare stages and teams: where debts are held and where they slip further.
What to do
Calculate roll rates every month for every bucket and look at the trend, not a single value. Investigate the reasons for any increase: a late start, poor contact data, promises nobody checked, a new inflow of higher-risk clients.
Calculate it both by number of contracts and by amount. Sometimes only a few debts roll forward, but they are large ones.
A common mistake is watching collections alone and missing that the portfolio is ageing. By the time the problem is visible, it is expensive to fix.
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