Your Net Collection Rate measures how much of the money owed to you is actually collected. Contractual adjustments are removed from your charges to determine if you are collecting all allowable amounts. The difference between 100% and your calculated Net Collection Rate can be considered your bad debt rate.
This number is best calculated over a long period of time, annual data for example. If your business is experiencing growth or reduction in charges this number may be distorted until these level out.
A normal Net Collection Rate is over 95%
All of these calculations are significantly impacted by the adjustments and write offs taken on your accounts. If you do not have a firm policy with quality checks for your write off procedures your measures may not be accurate.