The XIRR calculation is the extended internal rate of return that lets you see how much return you can earn during the remaining duration of a loan. If the number is green and positive, this indicates a possible profit in the long term; if negative, it indicates a possible loss. However, before you consider the XIRR as the sole factor in your decision-making, you should take a look at the borrower's payment behavior. Maybe you will see a new loan, which (naturally) has a high return expected, but is recently overdue. In that case, it’s up to you to evaluate how likely a repayment will be.
The XIRR considers the loan issue date and amount, the repayment dates and amounts, as well as the principal balance according to the original repayment date. In this calculation, overdue principal payments are written off immediately. For overdue loans, there is a chance to earn more return than is estimated in this number. No provisions for future losses are made and only received (not accrued or scheduled) interest payments are taken into account.