With the illustrative inputs below, the result is 900 .
Try this with your own numbersFormula and worked example
Expected loss = credit revenue × uncollected share × (1 − recovery)
| Input | Example |
|---|---|
| Credit revenue exposed | 50,000 |
| Expected uncollected share | 2 % |
| Expected recovery of unpaid amount | 10 % |
| Calculated result | 900 |
Choose reliable inputs
Account for delivery time, review work and when you expect to be paid for each engagement. For this accounting practice calculation, use time sheets, engagement scopes and invoice ageing and a consistent definition of one engagement.
- Professional hours: include the portion belonging to this engagement or reporting period, and record where the value came from.
- Software: include the portion belonging to this engagement or reporting period, and record where the value came from.
- Review: include the portion belonging to this engagement or reporting period, and record where the value came from.
Use the same currency for every money input. Do not mix weekly costs with monthly revenue, or count the same expense in both an itemised cost and allocated overhead.
Should invoiced revenue be treated as available cash?
The loss and recovery rates are entered assumptions. This is not an accounting-standard provision calculation.
What if this input changes?
If credit revenue exposed rises by 10%, this example changes by 90 . This shows the effect of one change; it does not predict what will happen.
Open the calculator, save your baseline, then change the input supported by the least reliable estimate in your records. Compare both scenarios before committing to a price or capacity promise.