Is ECL the same as a local tax doubtful-debt allowance?

No. Local tax allowances often require litigation/enforcement triggers. IFRS 9 measures expected losses earlier.

Who should use the simplified approach?

It is a practical expedient typically used for trade receivables and contract assets. Bank loan books usually apply the general approach.

What do Stages 1, 2 and 3 mean?

Stage 1: no significant increase in credit risk. Stage 2: significant increase. Stage 3: credit-impaired / default evidence.

Is a forward-looking adjustment required?

Yes. IFRS 9 requires reasonable and supportable forward-looking information, not historical averages alone.

Is this tool an official audit output?

No. It is educational. Real allowances depend on accounting policies, data quality and independent review.

Which currency should I use?

Inputs are displayed in TRY formatting; enter amounts consistently in your functional currency. FX translation is out of scope.

IFRS 9 Expected Credit Loss (ECL) Calculator

Calculate IFRS 9 / TFRS 9 expected credit loss and provision for trade receivables or loans.

Aging BucketsHistorical loss rate: the share of receivables in this aging bucket that historically were not collected.

Enter receivable balances and historical loss rates for each aging bucket.

Not Past Due

Receivable Amount (TRY)

Loss Rate (%)

1–30 Days Past Due

Receivable Amount (TRY)

Loss Rate (%)

31–60 Days Past Due

Receivable Amount (TRY)

Loss Rate (%)

61–90 Days Past Due

Receivable Amount (TRY)

Loss Rate (%)

More than 90 Days Past Due

Receivable Amount (TRY)

Loss Rate (%)

Forward-looking Economic Adjustment (%)

Prior Period Provision (TRY)

Total Receivables

TRY 1,213,000.00

Total ECL (Allowance)

TRY 40,535.00

Average Coverage Ratio

%3.34

Additional Provision

TRY 15,535.00

ECL Provision Matrix

Expected credit loss by aging bucket.

Aging Bucket	Receivable (TRY)	Historical Loss Rate (%)	Adjusted Rate (%)	Expected Credit Loss (TRY)
Not Past Due	TRY 850,000.00	%0.50	%0.55	TRY 4,675.00
1–30 Days Past Due	TRY 210,000.00	%2.00	%2.20	TRY 4,620.00
31–60 Days Past Due	TRY 95,000.00	%8.00	%8.80	TRY 8,360.00
61–90 Days Past Due	TRY 40,000.00	%25.00	%27.50	TRY 11,000.00
More than 90 Days Past Due	TRY 18,000.00	%60.00	%66.00	TRY 11,880.00
TOTAL	TRY 1,213,000.00		%3.34	TRY 40,535.00

Journal Entry

Account Code	Account Name	Debit	Credit
654	Provision Expense	TRY 15,535.00	—
129	Allowance for Doubtful Receivables (–)	—	TRY 15,535.00

The entry reflects the net movement versus the prior IFRS 9 allowance. Reclassification under local tax rules is a separate assessment.

About the Calculation Method

Simplified approach: ECL = Receivable × Historical Loss Rate × (1 + Forward-looking Adjustment) for each aging bucket.

General approach: ECL = EAD × PD × LGD, then discounted with 1 / (1 + Discount Rate)^Horizon.

Under IFRS 9 the discount rate should be the instrument's effective interest rate (EIR). For simplicity, this tool assumes default occurs at the end of the horizon and discounts the loss over the full remaining term.

What Is Expected Credit Loss (ECL) and Why Calculate It?

Discover what ECL is, why it is required, and how it is calculated—with simple examples.

Let's start with a simple example

1/6

Suppose you lend 1,000 TRY to each of 10 friends. They all say "I'll pay you back." But you know from life that probably 1 of these 10 will never manage to repay — maybe they will lose their job, maybe they will have some other problem.

Now ask yourself: how much money do you really have in your pocket?

On paper: you have 10,000 TRY receivable.
Realistically expected: you will probably get back only 9,000 TRY.

This is exactly what "Expected Credit Loss" (ECL for short) means: estimating in advance a loss that has not yet happened but is likely to happen, and taking it into account.

The same story applies to companies

2/6

Think of a company — whether it sells goods on credit and has trade receivables, or it is a bank that has granted loans. The company's books show an amount called "receivables." But in real life:

Some customers delay their payments.
Some can never pay (they go bankrupt, their business ends, they disappear).
Some loans become "non-performing" over time.

If the company writes "I will collect all of this money" in its books and leaves it at that, it actually looks richer than it is. This misleads both the company itself and the banks, partners and investors who look at it.

The ECL calculation is done to prevent this illusion: it estimates in advance the answer to the question "How much of this receivable/loan will we really not be able to collect?", records that amount as an expense and sets it aside (this is called a provision).

Why is it mandatory, who requires it?

3/6

This is not an arbitrary choice — it is a requirement of an accounting standard called TFRS 9 / IFRS 9. This standard is a rule that companies and banks in most countries of the world must follow when preparing their financial statements. Its purpose is simple:

Financial statements should show the real situation, not an embellished one.

In the 2008 global financial crisis, it turned out that banks' balance sheets that looked like "everything is fine" actually carried large hidden losses. Since then, the world has moved to the logic of "let's see the loss before it happens, at the moment it becomes probable." ECL is the result of that lesson.

So how is this calculation done? (Very briefly)

4/6

There are two simple approaches:

1. For trade receivables (receivables from sales of goods/services): You look at how much of similar receivables could not be collected in the past (for example, "60% of receivables more than 90 days overdue were historically never collected") and apply this rate to current receivables. In addition, the expectation of "how will the economy be in the coming period, worse or better" is added to this rate.

2. For loans (such as bank loans): Three things are asked:

How much is at risk? (what is owed if the borrower cannot pay)
What is the probability of non-payment? (what percent chance it will not be paid)
If it is not paid, how much do we lose? (if there is collateral, part of it is recovered)

Let's see it with an example again. This time you lend a friend 10,000 TRY, and they leave you something worth 6,000 TRY (say, their watch) as collateral "in case I can't pay." Now let's ask the same three questions for this example:

How much is at risk? If your friend one day becomes unable to pay, their debt to you at that moment is exactly 10,000 TRY. So the exposure is 10,000 TRY.
What is the probability of non-payment? You know your friend a bit, their work is somewhat unstable — say there is a 10% chance they become unable to repay this debt.
If they do not pay, how much do we lose? If they cannot pay, you have the watch as collateral; you can sell it and get 6,000 TRY. So only 4,000 TRY of the 10,000 TRY debt becomes a real loss — a loss rate of 40%.

Now let's multiply the three: 10,000 TRY (exposure) × 10% (probability of non-payment) × 40% (loss rate) = 400 TRY.

So you know from the start that, on average, you may never see 400 TRY of this 10,000 TRY receivable, and you prepare accordingly. Banks do exactly this calculation for millions of loans, one by one for each of them.

In addition, loans are divided into 3 stages according to their risk status: for loans performing normally, only the risk of the next 1 year is calculated; for loans whose risk has increased significantly or that have already become problematic, all the risk until the end of the loan is taken into account.

So what is this calculation good for?

5/6

The company does not fool itself. It knows how much money it really has.
Banks, investors and partners get reliable information. When making decisions they work with figures close to reality, not embellished ones.
Surprise losses decrease. Instead of appearing all at once and creating a shock, the loss is seen and managed little by little over time.
Audit and legal compliance are ensured. For companies applying TFRS 9, this calculation is a condition for their financial statements to be accepted as correct.

In short

6/6

ECL means preparing financial statements not with the naive optimism of "we will definitely collect every receivable/loan we have in full," but by thinking "realistically, based on past experience and current conditions, how much of it can we recover." Just as you want to know the real money in your pocket when you lend to your friends — companies too must know their true financial position.

IFRS 9 Expected Credit Loss (ECL) Calculator

Aging BucketsHistorical loss rate: the share of receivables in this aging bucket that historically were not collected.

ECL Provision Matrix

What Is Expected Credit Loss (ECL) and Why Calculate It?

Let's start with a simple example

The same story applies to companies

Why is it mandatory, who requires it?

So how is this calculation done? (Very briefly)

So what is this calculation good for?

In short

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