Does Ideal Default Exist?

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Ideal default: does it really exist? If you want to know more about this subject and master your sales even more, you need to keep following here.

Knowing how to calculate your business's default rcs database rate is one of the most important aspects of ensuring the success of your sales and cash flow. It is also a crucial step for those who want to reduce losses caused by customers who do not pay on time.

First of all, I can say that there is an ideal default rate. However, many stores have difficulty calculating this default rate in their business. With this in mind, I decided to write this article with all the information about default.

What do you think about checking out tips on calculation and mastering the business world even more?

Join me in this reading!

Is there such a thing as acceptable or ideal default? Watch this video on our YouTube channel and find out the answer!
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WHAT IS AN ACCEPTABLE OR IDEAL DEFAULT RATE?
Ideal or acceptable, there is a number that is considered normal for defaulting on sales. To understand more, it is worth highlighting important considerations: some stores think defaulting on sales is high, but do not calculate it to have data proof of this.

When we work with a credit operation, we need to find an ideal point. But, first of all, it is very important to understand that this point is not part of a rule; it will vary from business to business. Every store will seek a default rate equal to zero , but we know that, unfortunately, this is utopian and is not part of reality.

So, how do you find an adequate default rate?
The first step is to understand how much you are willing to lose, that is, how much you can risk or give as a discount. For example, if you give a 5% discount, we could assume that this would be the ideal average for your default. Based on this percentage, we can now start adjusting the operation, which will begin with a careful analysis of your reports.

Imagine that you already have a credit operation running. You will start to evaluate the default rates for 30 days, 60 days and 180 days. These reports will be the basis for your operation. Based on this, you can create the approval criteria. So, knowing what the appropriate default rate is for 30 days, we know how it will behave in the coming months and what to do to close at 5%.

Of course, there may be some fluctuation, since not all months are the same, but this way we can create an average. It is worth remembering that a very low default rate is also not good, because you end up being so restrictive in credit that you may eventually have a default rate of 2% selling R$50,000, but if you had a default rate of 3%, for example, you could be selling R$75,000. Do you understand that?

That's why we call it ideal default, because up to a certain point it can be worth it for your cash flow to have 1% more default in your business. Having all of this calculated and balanced, we can reach the best possible point for the store.