Work out bad debt provision instantly with clear inputs, formula shown and shareable results.
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.
Ageing provision
ECL = (Current x 0.5%) + (30-90 days x 5%) + (Over 90 days x 30%)
Total provision
Total = ECL + Specific provisions
From your own history: track what proportion of each bucket ultimately became irrecoverable over several years, then adjust for the forward-looking outlook.
No. It reduces the carrying amount while collection continues. Write-off happens only when recovery is abandoned.