ECL Provision Matrix Calculator

Under IND AS 109, companies must recognise a loss allowance for expected credit losses on all financial assets (trade receivables, loans, contract assets, lease receivables). Unlike the old incurred-loss model under AS 26, ECL is forward-looking — you provision for losses expected to happen, not just those already incurred. For trade receivables without a significant financing component, the simplified approach using a provision matrix is mandatory.

Start with historical write-off data — for each ageing bucket, compute the % of receivables that were eventually written off over the past 3–5 years. Then adjust upward or downward for forward-looking factors: economic conditions, the specific debtor's industry outlook, customer credit ratings, and management's assessment of recoverability. Document the basis thoroughly — this is a key accounting estimate and auditors will scrutinise it.

Yes — significantly. Under AS 26 (IGAAP), provision was made only for losses that had already occurred (incurred-loss model). Under IND AS 109, you must provision for losses expected to occur even if there is no specific evidence of default yet. The provision matrix applies a loss rate to all receivables in each bucket — including current, not-yet-due receivables — not just those showing signs of impairment.

At minimum, at each reporting date (year-end and interim periods). The loss rates must be reviewed for changes in historical experience and updated for changes in forward-looking information. For example, if the economic outlook has deteriorated or a major customer sector is under stress, the rates should be revised upward even if historical data does not yet reflect it.