The loss and recovery rates are entered assumptions. This is not an accounting-standard provision calculation.
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
Connect teaching time, preparation, attendance and room capacity to each lesson or class. For this music teaching calculation, use attendance records, teaching schedules and room costs and a consistent definition of one lesson.
- Teaching time: include the portion belonging to this lesson or reporting period, and record where the value came from.
- Preparation: include the portion belonging to this lesson or reporting period, and record where the value came from.
- Studio overhead: include the portion belonging to this lesson 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.