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Recovery Rate On Defaults Calculator

Work out recovery rate on defaults instantly with clear inputs, formula shown and shareable results.

About Recovery Rate On Defaults Calculator

Gross recovery ignores the cost of chasing the money. Netting legal and collection expense, and noting how long recovery took, gives the figure that should feed loss given default estimates.

Formula

Recovery rate

Net rate = (recovered - collection cost) / defaulted amount

Worked example

With the default values below, Recovery Rate On Defaults Calculator returns Net Recovery Rate of 36.5000%. Change any input above and every figure here is recalculated in your browser.

Inputs used

Defaulted Amountminimum 0
40,000,000
Amount Recoveredminimum 0
17,000,000
Collection And Legal Costminimum 0
2,400,000
Months Taken To Recoveraccepts 1–120
30

Results

Net Recovery Rate
36.5000%
Gross Recovery Rate
42.5000%
Collection Cost As Share Of Recoveries
14.118%
Annualised Recovery Rate
13.254%

Step by step

  1. 1Values used
  2. 2Recovery rate
  3. 3Net Recovery Rate= 36.5000
  4. 4Gross Recovery Rate= 42.5000
  5. 5Collection Cost As Share Of Recoveries= 14.118
  6. 6Annualised Recovery Rate= 13.254

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or compounding frequency into account.
  • Figures are rounded for display to 4 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.

Frequently Asked Questions

Why does collection cost matter so much?

On unsecured recoveries it can consume a fifth of what is collected, turning a respectable gross rate into a poor net one.

Does selling the portfolio help?

Sale prices are lower but immediate and certain, which can beat a slow, costly in-house recovery.

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