Cost of Bad Debt Calculator
Understand the true cost of write-offs and how much revenue you need to recover them.
Enter Your Numbers
Your total annual revenue (credit sales)
Total amount written off as uncollectible per year
Your company's net profit margin percentage
Select your industry for benchmark comparison
The Profit Margin Multiplier
Every dollar of bad debt requires multiple dollars of new revenue to recover, based on your profit margin. This is because you've already incurred the cost of goods sold—you only keep the profit margin on new sales.
| Profit Margin | Multiplier | $10K Write-off Needs |
|---|---|---|
| 2% | 50x | $500,000 |
| 5% | 20x | $200,000 |
| 8% | 12.5x | $125,000 |
| 10% | 10x | $100,000 |
| 15% | 6.67x | $66,700 |
| 20% | 5x | $50,000 |
The True Cost of Your Bad Debt
Revenue Required to Recover This Loss
$2,500,000
At your 8% margin, you need 12.5x the write-off amount in new sales
Your Bad Debt Ratio
2.00%
Equipment Rental Bad Debt Benchmarks
Top Performers
< 0.8%
Median
2%
Poor Performers
> 3.5%
Improvement Opportunity
If you reduced your bad debt ratio to top-performer level (0.8%):
Annual Savings
$120,000
less write-offs per year
Revenue Equivalent
$1,500,000
in new sales value
How to Reduce Bad Debt
- Implement credit checks before extending terms to new customers
- Follow up on past-due accounts earlier and more consistently
- Resolve disputes quickly before they become write-off candidates
- Monitor customer payment patterns for early warning signs
- Use AR automation to increase touch rate on aging accounts
Want to reduce your bad debt?
See how Able Collect helps companies reduce bad debt by 25-50% through earlier intervention and AI-powered prioritization.