v0.7 prototype. Simplified loss-rate method for short-duration trade receivables. Not for loans, debt securities, or longer-duration instruments.
ASC 326-20 + SAB TOPIC 119 + ASU 2025-05

CECL Allowance Estimator

Current Expected Credit Loss model for trade receivables. AR aging buckets × historical loss rates × Q-factor current-conditions adjustments × reasonable-and-supportable forecast. Output: allowance, build-up by bucket, ASC 326-20-50 required disclosures.

Step 1 — AR aging × historical loss rates

Pull aging from trial balance. Use 3-5 years of trailing write-off data per bucket.
BucketAR balance ($)Historical loss rate (%)
Current (0-30 days)
31-60 days past due
61-90 days past due
91-120 days past due
Over 120 days past due

Step 2 — Current conditions (Q-factor) adjustments

Adjust historical baseline for current conditions different from history. ASC 326-20-30-7.
Any single customer > 10% of AR?
Material adverse trend in customers' industries
Operational factor — DSO direction
Vs prior 12 months

Step 3 — Reasonable-and-supportable forecast

Forward macroeconomic adjustment. ASC 326-20-30-9.
Honest limits: This is a simplified loss-rate estimator for short-duration trade receivables. ASC 326 requires a documented, validated, governance-approved model with back-testing per SR 11-7 and SAB Topic 119. NOT appropriate for loans, debt securities, AFS/HTM securities, or longer-duration instruments — those require DCF, vintage analysis, PD/LGD/EAD, or migration matrix approaches. The ASU 2025-05 "current conditions" practical expedient is available to all entities, including public business entities; the separate accounting-policy election to consider post-balance-sheet collections is not available to PBEs. For hands-on support on CECL methodology and documentation: rohit@unfoldingvalues.com.
What this tool does NOT do:
  • DCF approach (required for instruments with significant prepayment / extension optionality)
  • Vintage analysis for loan portfolios with similar origination periods
  • PD × LGD × EAD modeling for banks
  • Migration matrix approach for graded portfolios
  • Off-balance-sheet credit exposures (unfunded commitments) under ASC 326-20-30-11
  • AFS debt securities CECL (different model, ASC 326-30)
  • Held-to-maturity debt securities CECL (ASC 326-20)
  • Purchased credit-deteriorated (PCD) assets
  • Reasonable-and-supportable forecast period and reversion methodology documentation
  • Model validation, governance approval, back-testing (SR 11-7 / SAB Topic 119)
  • Pool segmentation analysis — pools must share similar risk characteristics