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Bad Debt Provision Calculator

Work out bad debt provision instantly with clear inputs, formula shown and shareable results.

About Bad Debt Provision Calculator

An expected-credit-loss provision applies a loss rate to each ageing bucket — here 0.5% on current, 5% on 30-90 days and 30% beyond 90 days — and adds specific provisions for known disputes or insolvencies. Replace the illustrative rates with your own historical roll-rate data.

Formulas

Ageing provision

ECL = (Current x 0.5%) + (30-90 days x 5%) + (Over 90 days x 30%)

Total provision

Total = ECL + Specific provisions

Worked example

With the default values below, Bad Debt Provision Calculator returns Total bad debt provision of $30,250.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Receivables not yet due
420,000
Overdue 30-90 days
95,000
Overdue more than 90 days
38,000
Specific provision for known disputes
12,000

Results

Total bad debt provision
$30,250.00
Ageing-based expected credit loss
$18,250.00
Provision as % of gross receivables
5.47%
Net receivables carried
$522,750.00

Step by step

  1. 1Values used
  2. 2Ageing provision
  3. 3Total provision
  4. 4Total bad debt provision= 30,250.00
  5. 5Ageing-based expected credit loss= 18,250.00
  6. 6Provision as % of gross receivables= 5.47
  7. 7Net receivables carried= 522,750.00

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Where do the loss rates come from?

From your own history: track what proportion of each bucket ultimately became irrecoverable over several years, then adjust for the forward-looking outlook.

Does a provision write off the debt?

No. It reduces the carrying amount while collection continues. Write-off happens only when recovery is abandoned.

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