Recovery Rate

What it is

The recovery rate is the proportion of a debt that is actually collected, usually shown as a percentage of the amount owed. For example, collecting 8,000 dollars on a 10,000 dollar debt is an 80 per cent recovery rate. It can be measured per account or across a whole portfolio of debts.

It is a key measure of how effective a recovery process or agent is at turning overdue amounts into real payments.

Why it matters

A higher recovery rate means more of your money comes back rather than being written off. Comparing recovery rates helps a business judge whether its internal collections, or a chosen recovery agent, are performing well. It also guides decisions about when to escalate or settle.

You can estimate likely outcomes on different debts using the calculators at tools.merion.com.au.

Good to know

This is general information and not legal advice. Recovery rates vary widely with the age, size and type of debt, the strength of the paperwork and the debtor's circumstances, so no particular rate can be promised in advance. Fresh debts generally recover at much higher rates than old ones, which is why prompt action on an overdue account tends to improve overall results. When comparing performance, it helps to look at recovery rates for similar types and ages of debt, rather than a single headline figure that may not reflect your own ledger.