How to use the Bad Debt Reserve Calculator
- Enter AR for each aging bucket.
- Edit loss percentages to match your history.
- Read the required allowance.
How it works
Allowance = Σ (Bucket balance × Bucket loss %). Net realizable receivables = Total AR − Allowance.
Worked example
With 800,000 current at 1%, 200,000 at 3%, 100,000 at 10%, 60,000 at 25% and 40,000 at 50%, the allowance is 8,000 + 6,000 + 10,000 + 15,000 + 20,000 = 59,000.
Good to know
Base percentages on your own historical write-offs.
Accounting standards such as CECL (US) or IFRS 9 require expected-loss approaches.
Review the reserve at least quarterly.
Frequently asked questions
Applying increasing loss percentages to receivables as they get older.
Your historical loss rates by bucket; the defaults are only examples.
It gives the target balance; the entry is the difference from your current allowance.
Results are estimates for information only and are not accounting, financial or legal advice.