Bad Debt Provision Calculator
Estimate a provision for doubtful debts across your trade receivables using the provision-matrix method. Enter each ageing bucket balance and the provision percentage you apply, and this calculator returns the total provision and your blended provision rate.
Ageing buckets
Enter the outstanding receivables balance in each ageing bucket and the provision percentage you apply to it. Older debts typically carry a higher provision.
How the provision-matrix method works
A provision matrix applies a fixed loss percentage to each ageing band of your trade receivables. The percentages are usually derived from your own historical collection experience — what proportion of debts in each band has ultimately gone unpaid. Multiplying each bucket balance by its percentage and summing the results gives an estimated provision for doubtful debts, which you carry as a contra-asset against your receivables.
The defaults shown here are illustrative only. Your provision percentages should reflect your actual bad-debt history, the credit quality of your customer base, and any forward-looking adjustments for current and expected economic conditions.
Provisioning is an accounting estimate made under AASB 9 expected-credit-loss principles. This calculator provides general information only and is not accounting advice — confirm the appropriate provision percentages and treatment with your accountant.
The ageing provision-matrix approach
Under the provision-matrix approach, you split your trade receivables into ageing bands — typically current (0–30 days), 31–60 days, 61–90 days, and 90+ days — and apply a separate loss percentage to each. The longer a debt has been outstanding, the less likely it is to be recovered, so the percentage rises with age. The provision for each bucket is simply its balance multiplied by its percentage, and the total provision is the sum across all buckets.
Where the percentages come from
The loss percentages are not arbitrary. They are normally built from your own historical bad-debt experience — the proportion of receivables in each age band that has ultimately gone uncollected — and then adjusted for current and reasonably foreseeable economic conditions. This forward-looking adjustment reflects the expected-credit-loss principles that underpin credit-related accounting estimates for trade receivables. Review and refresh your percentages periodically so they keep pace with how your customers actually pay.
A provision is not a write-off
Recognising a provision does not extinguish the debt. The amount is still legally owed and remains collectable — provisioning simply reflects the accounting risk that some of it may not be recovered. Continue to pursue overdue accounts; if a provisioned debt is later paid, the provision is reversed. Only a debt that is genuinely irrecoverable is written off against the provision. Merion recovers commercial debts on a commission-only basis, so you can keep chasing the balance rather than conceding it.
Provisioning is an accounting estimate made under AASB 9 expected-credit-loss principles. This calculator provides general information only and is not accounting advice — confirm the appropriate provision percentages and treatment with your accountant.
A provision is not a lost cause.
Commission-only recovery — no recovery, no fee. Before you write a debt down, let Merion pursue the full outstanding balance.
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