Not every balance should be pursued. A structured recoverability assessment protects margin and management attention.
Recovery spend is finite. Directing it at balances with no realistic prospect of collection depresses net recovery across the whole portfolio, however diligent the effort applied.
A recoverability assessment considers four factors: contactability of the debtor, evidence of means, quality of documentation and the remaining limitation period. Files failing on more than one of these rarely justify escalation.
Tracing and verification work should be commissioned before, not after, a decision to litigate. The cost of confirming that a debtor has no recoverable means is a fraction of the cost of discovering it through proceedings.
Portfolio segmentation on these criteria typically allows organisations to concentrate the majority of effort on the minority of accounts that will produce most of the recovery.