A 90-day-past-due balance is far less likely to be collected than a current one — this applies a different uncollectible-percentage assumption to each aging bucket.
How it works
Each aging bucket’s balance is multiplied by its own estimated uncollectible percentage, and the results summed into a total estimated bad debt reserve.
What this does not include
The specific uncollectible percentages used vary by industry, customer base, and historical collection experience — this calculator applies whatever percentages are entered rather than a fixed universal schedule.
How to use this calculator
- Enter balances and estimated uncollectible percentages for each aging bucket.
Frequently asked questions
Why use different percentages for each aging bucket?
Because the longer a receivable goes unpaid, the less likely it becomes to ever be collected — the aging method captures that risk gradient more accurately than a single flat percentage across all receivables.
How are uncollectible percentages typically determined?
Often based on a business’s own historical collection experience for each aging category, adjusted for current economic conditions and customer base changes.
What’s the accounting purpose of this reserve?
It reduces reported accounts receivable to a more realistic net collectible amount, following the accounting principle of recognizing expected losses rather than waiting until a specific receivable is confirmed uncollectible.
