It’s important for a lender to know which loans are performing (making payments) and which accounts are nonperforming (or stale) so the receivables are clean and accurately reflect the health of a portfolio.  Simplisticly, it comes down to if a borrower is paying you or not paying you and how the lender views and handles this delinquency.  There are two types of delinquency:

Recency Delinquency
Recency delinquency is measured by the last time a (minimum) payment was made on the loan. Recency delinquency is a more forgiving model which is more concerned with the customer paying today and not so much if they’ve missed (or skipped) payments.  The customer is delinquent / past due, but making payments.  In a sense, when a borrower who is past due, makes a payment, the delinquency starts over.

Contractual Delinquency
Contractual delinquency measures how many missed payments are on the loan. To contrast this with recency delinquency, a qualifying payment will only reduce the level of delinquency, but the loan account will still be considered delinquent.  This method is more applicable in a legal sense.  Please note, this is measured in Intro XL using the payment status.  These payment status can change over time, so running reports in the past can produce different results.

Under contractual delinquency, if a customer has missed the last three months of payments and then makes a full payment, the customer will now be considered to have two missed (delinquent) payments.  With recency, the same example makes the customer current, until they miss their next scheduled payment.

Depending on your model and customer base, recency can be a practical method if it’s common to be delinquent or skip payments, like a short term loan.  A customer may have missed three payments, but they’ve made their last 3 payments, and that’s fine, and the customer will not be in collections.