Finance category
Mortgage, loan, investing, tax, and money calculators.
Bad Debt Rate Calculator
Bad debt rate is the cleanest property AR health metric — write-offs as a percentage of gross billings. Combined with collection rate and DSO (days sales outstanding), it tells operators whether screening, collections process, or local market conditions are driving losses. This calculator computes all three for benchmarking against industry norms.
Bad debt % of billings
1.20%
Collection rate %
97.00%
Days sales outstanding
15.6
How the math works
Bad debt rate = annual write-offs ÷ gross billings. Industry benchmarks: Class A multifamily 0.5-1.5%; Class B 1.5-3%; Class C 3-6%. Workforce/affordable can run 5-10%. DSO under 30 days is healthy; over 45 signals collection process problems.
Tighter screening (3x rent income, 600+ credit) plus active early-delinquency follow-up (day 4 call, day 10 notice) typically cuts bad debt 30-50%.
How to Use
- Enter annual write-offs, gross billings, and actual collections.
- Enter outstanding AR.
- Read bad debt %, collection rate, and DSO.
Frequently Asked Questions
Industry benchmarks?
Class A 0.5-1.5%; Class B 1.5-3%; Class C 3-6%; affordable/workforce 5-10%. DSO healthy under 30 days.
Differences across markets?
Tight regulatory markets (CA, NY) often have higher bad debt due to longer eviction timelines. Texas and FL faster eviction = lower bad debt.
Reduce bad debt?
Income verification at 3x rent minimum, credit screening (600+ score), active early-delinquency follow-up (day 4 call), and small-claims court for collection (rather than write-off) all cut bad debt.
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