What is a company’s recovery rate?

The recovery rate is a key indicator for any business. It measures how effectively it recovers amounts owed by its customers. But what does this rate really mean and how can it be optimized? As a debt collection company , GESTION CREDIT EXPERT provides you with all the answers you need to better understand this essential issue for the financial health of your business.

What is the recovery rate?

The recovery rate is a key performance indicator (KPI) that measures the effectiveness of a company in recovering unpaid receivables from its customers. It is expressed as a percentage and represents the ratio between the amount of receivables actually recovered and the total amount of receivables owed.

This rate is essential for assessing the financial health of a company, because it shows its ability to recover its receivables and, therefore, to maintain good cash flow.

How to calculate the recovery rate?

The recovery rate represents the share of recovered debts in relation to the total debts to be recovered over a given period. It is calculated as follows:

Recovery rate (%) = (Amount of receivables recovered / Total amount of receivables) x 100

• Amount of debts recovered : This is the total amount of debts that have been recovered from debtors.

• Total amount of receivables : this is the total sum of receivables issued, which the company is seeking to recover.

For example, if a company has managed to recover €80,000 out of a total of €100,000 in receivables, its recovery rate is 80%.

This rate allows you to assess the effectiveness of recovery actions and compare performance over different periods or between different recovery services. A high rate indicates effective management, while a low rate may be a sign of difficulties in recovering debts.

How to improve your recovery rate?

Improving your debt collection rate is a major challenge for any business, regardless of its size or sector. Unpaid debts can jeopardize cash flow and hamper business growth. Several levers can be used to optimize this process:

Negotiate payment terms

Negotiating payment terms is an essential first step. By tailoring payment terms to each customer or prospect, it’s possible to significantly reduce the risk of non-payment. This may include:

• Offer payment plans : this solution can be particularly interesting for customers in temporary difficulty.
• Provide cash payment discounts : This encourages customers to pay their bills more quickly.
• Implement late payment penalties : this deterrent measure can be effective for recalcitrant customers.
• Negotiate deposits : For large-scale projects, requesting a deposit helps secure part of the revenue and reduce the risk of non-payment in the event of a dispute.

Optimize the invoicing and reminder process

An efficient invoicing and recovery process is essential for fast and smooth debt collection . It is important to:

• Issue invoices quickly : the shorter the time between the service and the invoicing, the less likely the customer will be to forget to pay.
• Personalize reminders : Personalized reminders are more effective than generic reminders.
• Set up an automated reminder system : this allows you to send regular reminders without manual intervention.
• Use different communication channels : sending reminders by mail, email and telephone increases the chances of being heard.

Call a debt collection agency

If, despite your best efforts, payments remain unpaid, hiring a debt collection agency can be an effective solution. These specialized companies have the resources and expertise to handle debts professionally while maintaining customer relationships. By outsourcing the debt collection process, you save time and gain better control over complex cases. A company like GESTION CREDIT EXPERT can, for example, intervene at every stage of the debt collection process to maximize your chances of recovering your debts as quickly as possible.

EXPERT CREDIT MANAGEMENT: your partner to increase your recovery performance

GESTION CREDIT EXPERT puts its expertise at the service of your business to significantly improve your recovery rate. As a 100% French and independent partner, we adapt our solutions to your needs, whether you are a VSE, an SME, or a large corporation.

Our personalized approach allows you to:

• Boost your cash flow : quickly recover your unpaid debts to improve your cash flow and finance your growth.
• Improve your WCR : reduce your payment terms and optimize your working capital requirements.
• Secure your turnover : put in place robust processes to prevent non-payments and protect your revenue.

A good collection rate isn’t built overnight. It’s the result of a comprehensive strategy that includes preventing unpaid bills. By implementing robust billing procedures and carefully selecting your clients, you’ll significantly reduce the risk of disputes.

To optimize your recovery rate and ensure healthy management of your receivables, do not hesitate to contact our recovery experts . We offer tailor-made solutions to support you in all stages of the process.