Delayed debt and recovery rates are inversely proportional. The recovery rate varies by the amount and the age of debts. According to data from a US debt collection agency industry group, the average recovery rate dips below 80% when delayed by 90 days.
The recovery rate here is not for the number but the amount. In other words, $ 8,000 can be recovered if you have $ 10,000 debt with overdue 90 days. However, when the delay period passes one year, this ratio falls to almost 20%. Even the same debt can only be recovered less than $ 2,000.
You should see the need for early recovery. In fact, many companies in Europe and the United States manage accounts receivable on the basis of 90 days. Basically, late claims after 90 days will not be voluntarily collected in house and they are usually placed for collection to a collection agency. The rule of thumb is that they know that the recovery rate is higher, and that is how they are defined in their own credit policy.
When collecting delayed loans overseas, Japanese companies can also refer to the idea of 90 days.
