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Bad Debt Recovery Lag Calculator
Post-writeoff recovery takes time and fee loss.
Net PV of recovery
$22,934
Gross recovery
$39,600
Recovery net of agency fees
$25,740
How the math works
Gross = writeoff × recovery rate. Net of fees = gross × (1 − fee). PV = net / (1+r)^years.
$180k × 22% = $39.6k gross. × 65% = $25.7k net. PV at 8% over 1.5 yr = $22.9k — small fraction of original balance.
How to Use
- Enter bad debt written off.
- Enter collection agency recovery rate %.
- Enter agency fee %.
- Enter avg months to recover.
- Enter discount rate %.
- Read net present value of recovery.
Frequently Asked Questions
Recovery rates?
Post-writeoff collections: 15-30% of gross balance typically via third-party agency. In-house attempts: 10-15%. Judgment attachment (wage/bank): 20-40% if obtained, much lower without judgment. Write-off rarely equals zero but never returns full balance.
Fee structures?
Collection agencies: 25-45% of amount recovered on contingency. Aggressive agencies (portfolio purchase): buy at 3-8 cents on the dollar, keep 100% of recovery. Legal judgment route: lawyer fees 20-33%, plus court costs. Net recovery always less than gross.
Time value?
Agency collections average 12-24 months post-placement before material recovery. Judgment enforcement: 6-18 months. PV impact material — $10k recovered in 24 months at 10% discount = $8.3k today. Include lag in recovery budgeting.
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