Collection Efficiency Calculator
Measure how effectively your portfolio is collecting against expected repayment schedules.
What Is Collection Efficiency?
Collection efficiency measures how closely actual daily collections match expected collections. If your portfolio should collect $135,000 this month based on active merchants and their daily payment schedules, but you actually collect $120,000, your efficiency is 89%. The 11% shortfall ($15,000) represents merchants who missed payments, had reduced revenue (lowering percentage-based holdbacks), or defaulted. Tracking efficiency monthly provides an early warning system for portfolio stress. Declining efficiency over 2-3 consecutive months signals rising defaults before they are formally classified. For syndicators and funders, collection efficiency is the leading indicator of portfolio health -- it deteriorates before default rates spike.
How to Use This Calculator
Enter outstanding RTR and collections
RTR outstanding is the total remaining balance across all active positions. Actual collections come from your servicing platform or bank reconciliation.
Enter expected collections
Expected collections = sum of all active merchants' daily payments x business days in the month. Your servicing platform should calculate this automatically.
Track efficiency over time
A single month's efficiency is a data point. Three months of trend is a signal. Efficiency above 90% is healthy. 85-90% is cautionary. Below 85% requires immediate investigation.
Key Concepts
Collection Efficiency
Actual collections divided by expected collections. 100% means every expected payment was received. Below 100% means some merchants are under-paying or missing payments.
Leading Indicator
Collection efficiency deteriorates 30-60 days before formal defaults are classified. It is the earliest signal of portfolio stress and should be your primary monitoring metric.
Shortfall Analysis
Breaking down the collection gap by merchant to identify which accounts are underperforming. A shortfall concentrated in 2-3 merchants is less concerning than one spread across 20+ merchants.
Expert Insights
The 90% Rule: If collection efficiency drops below 90% for two consecutive months, investigate immediately. Identify the merchants driving the shortfall and categorize: are they temporarily slow (seasonal, one-time expense) or structurally impaired (declining business, over-leveraged)? Temporary slowdowns resolve. Structural impairment escalates to default. Early intervention -- contacting the merchant, adjusting terms, offering a modification -- can prevent 30-40% of potential defaults.
Seasonal Efficiency Patterns: Some efficiency decline is seasonal and expected. Restaurant portfolios dip in January-February. Retail drops after holiday season. Construction slows in winter months. Build seasonal adjustment into your efficiency benchmarks so you do not overreact to predictable patterns. The concern is efficiency drops that deviate from the seasonal norm.
Frequently Asked Questions
Results are estimates for educational purposes only. Actual amounts may vary based on your specific financial situation, market conditions, and other factors. This calculator does not constitute financial advice.
Run These Numbers Too
Portfolio Performance Dashboard
Track key portfolio metrics: collection rate, default rate, ROI, and deal composition.
Default Rate Impact Calculator
Model how merchant default rates affect portfolio yield, losses, and net returns.
Stress Test Calculator
Model portfolio performance under adverse scenarios: doubled defaults, tripled defaults, and economic contraction.
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