Define the measurement first
For a stated collection cohort:
Gross recovery rate (%) = cash recovered from the cohort / reference balance for that cohort × 100
Specify whether the reference balance is the amount placed for collection, the balance at default, or another documented basis. These measures should not be compared as though they were identical.
Gross versus net recovery
Hypothetical example: A cohort with $100,000 placed for collection produces $30,000 in settled receipts over six months. Gross recovery is 30%. If directly attributed collection costs are $5,000, a net-of-those-costs measure is 25%.
State which costs are included. Payment reversals, refunds, and returned payments also require a consistent policy.
Comparing results fairly
Use matched cohorts and equivalent observation periods. A recently placed group has had less time to recover than an older one. Account age, disputes, collateral, and debt type also affect comparability.
Do not count payment promises as collected cash or reduce the denominator simply because a balance was written off. Recovery rate is distinct from CEI, which uses a period's receivables and credit sales.