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Banking and lending

Debt collection agency financial model, built free.

A three-statement Excel model for a debt purchaser and collection agency, built from your own figures and checked to balance.

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We use generative AI in parts of our process, so mistakes can occur. Every model should be checked by a person before it is relied on. Read more

The business

Buys portfolios of defaulted consumer debt at a fraction of face value and collects them over several years, and collects debts for clients on contingency, earning the return on purchased ledgers plus commissions.

See the sampleHow the model works

In short

  • 01

    Three linked statements

    Income statement, balance sheet and cash flow, linked in every period.

  • 02

    Valued two ways

    Discounted cash flow and trading multiples, side by side.

  • 03

    Monthly to annual

    Monthly, quarterly, half-yearly or annual periods, for up to 30 years.

  • 04

    Checked every period

    A Checks sheet shows the balance sheet balances and the cash reconciles.

The sample

The sample, as Excel draws it.

Built by the same system and checks as yours, on illustrative figures: every sheet as Excel draws it, or live.

Annual · 10 years · Low detail
Debt collection agency sample model.xlsx
The Summary sheet of the sample debt collection agency model

Illustrative figures: the sample describes no real business. The live preview shows values; your model’s Excel file has every formula.

How it works

How the model works for a debt collection agency.

  1. How it earns revenue3 formulas
    Revenue recognition and carrying value · All purchased debt portfolios
    Purchased debt revenueRevenue at the EIR (on opening value and on mid-period flows)Collections on fully amortised ledgers (zero-basis revenue)
    Revenue recognition and carrying value · All purchased debt portfolios
    Collections applied to the carrying valueCollectionsfrom collections curve and remaining collectionsPurchased debt revenue
    Revenue recognition and carrying value · All purchased debt portfolios
    Closing carrying valueOpening carrying valuePurchases of debt ledgers (price paid)from debt ledger purchasesPurchased debt revenueNet revaluation gain or (loss)Collectionsfrom collections curve and remaining collections
  2. What drives its costs2 formulas
    Operating expenses · Across the business
    Operating expensesStaff costs (annual)Marketing (annual)Occupancy (annual)Administration (annual)share of the year
    Cost to collect
    Cost to collectCall centre and arrangementsDigitalLegalExternal agenciesContingency collections for clients
  3. What it invests in3 formulas
    Corporate fixed assets
    Capital expenditureRevenuefrom statementsCapex as % of revenueAdditional planned capex
    Corporate fixed assets
    DepreciationDepreciation of the opening asset baseDepreciation of new capex
    Corporate fixed assets
    Closing net book valueOpening net book valueCapital expenditureDepreciation
  4. How it is funded3 formulas
    Debt
    Cash before revolver draws and sweepOpening cashNet operating cash flow (statements)from statementsCapital expenditure (positive, net of proceeds) (statements)from statementsEquity raised (equity raising)from equity raisingDividends paid (dividends and distributions)from dividends and distributionsLess prepayments from an equity raise and the cash sweepLess repayment forced by a lower limit
    Debt
    RepaymentsLess repayment forced by a lower limitLess prepayments from an equity raise and the cash sweepRepayments from cash above the minimum
    Debt
    Closing balanceOpening balanceDrawdowns to restore the minimum cash balanceRepayments
  5. How profit becomes cash3 formulas
    Working capital
    Trade receivablesRevenuefrom statementsDebtor daysDays in period
    Working capital
    InventoryDirect costs (positive)from statementsInventory daysDays in period
    Working capital
    Trade payablesCash operating costs (positive)from statementsCreditor daysDays in period
What it covers

21 parts, each one tested.

Every part is a tested building block with its own checks: yours is put together from the ones your business needs.

  • CPI forecastConsensus curve with long-run anchor
  • Operating expensesOperating expense line items
  • Corporate costsFixed cost base indexed to CPI
  • Working capitalDays-based working capital
  • Income taxCorporate rate with tax losses
  • Corporate fixed assetsStraight-line over remaining life
  • DebtRevolver with cash sweep
  • Equity raisingDistribution reinvestment plan
  • Dividends and distributionsPayout of net profit
  • Discounted cash flow valuationDCF on free cash flow to the firm
  • Multiples valuationEV / EBITDA multiple
  • Cost to collectCollections × cost-to-collect ratioCollector, legal, dialler and agency costs of collecting purchased and client debts.
  • Contingent collection and agency feesPlacements × liquidation × commissionCommission earned collecting debts on behalf of clients (banks, utilities, government) without buying them.
  • LeasesLease register
  • Key-metric summaryLast-twelve-month and run-rate metrics
  • Covenant tests and headroomFacility-agreement definitions and step-downs
  • Borrowing base and security coverReceivables and inventory borrowing base
  • Case selectionStackable stress toggles
  • Debt ledger purchasesPurchasing budget ÷ priceDefaulted receivables bought, their face value and the price paid.
  • Collections curve and remaining collectionsPurchase price × collection multiple over a curveCash collected on each purchased portfolio over time and the estimated remaining collections (ERC).
  • Revenue recognition and carrying valueEffective interest rateRevenue from purchased debt, amortisation of its carrying value, and revaluation when collection forecasts change.
Key numbers

The numbers it tracks.

  1. 01purchasing outlay
  2. 02collections
  3. 03estimated remaining collections
  4. 04cost to collect
  5. 05return on purchased debt
  6. 06carrying value
  7. 07net debt to ERC
Used for

What it is used for.

Also used for
  • Scenarios and sensitivities
Related models

More in banking and lending.

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The sample is built on illustrative figures and describes no real business. Models are calculations prepared from the information you provide. They are not financial advice and must be independently verified. See our terms.