IFRS 9 · Technology

IFRS 9 ECL Calculator
for Technology

Pre-configured for technology entities with SaaS subscription receivable defaults, enterprise project billing considerations, and startup customer default risk factors.

Benchmark rates loaded. These are illustrative only. Replace with entity-specific historical loss data for IFRS 9 compliance.

Provision Matrix

Define aging buckets, enter gross carrying amounts and historical loss rates. Per IFRS 9.B5.5.35.

Forward-Looking Adjustment

Required by IFRS 9.5.5.17. Purely historical rates are not IFRS 9 compliant.

Advanced Features

Optional: probability-weighted scenarios, movement schedule, specific assessment, and entity details.

IFRS 9 ECL Audit Working Paper Template — free PDF

Practical audit guide covering the simplified approach provision matrix methodology, forward-looking adjustment documentation template, probability-weighted scenario framework, IFRS 7.35H movement schedule template, common ISA 540 findings on ECL estimates, and industry benchmark loss rates for 12 sectors.

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IFRS 9 Expected Credit Losses for Technology

Technology companies present a distinctive IFRS 9 ECL profile that varies dramatically depending on the business model. SaaS (Software-as-a-Service) companies with subscription-based revenue have highly predictable, recurring receivables with relatively low default rates. Enterprise software and services companies with project-based billing may have concentrated, high-value receivables with payment terms of 60–90 days. Technology companies selling to startup customers face elevated credit risk because early-stage companies have high failure rates. The key challenge for technology entity ECL estimates is appropriately segmenting the receivable portfolio to reflect these different risk profiles — a blanket loss rate applied to all technology receivables will not accurately capture the risk differential between a subscription receivable from a Fortune 500 customer and a project receivable from a pre-revenue startup.

Receivable Characteristics — Technology

SaaS subscription receivables are the lowest-risk category within technology — they are typically small, recurring, and subject to automated payment processing with dunning procedures that quickly identify non-payers. Enterprise project receivables represent higher individual values with longer payment cycles and are subject to acceptance testing, change orders, and milestone disputes. Channel partner and reseller receivables carry intermediary credit risk. Technology companies with significant hardware components may have receivables related to equipment sales with different risk profiles from software receivables. Deferred revenue adjustments and contract asset balances under IFRS 15 interact with the receivable analysis and must be carefully classified to determine IFRS 9 scope.

Forward-Looking Factors

The technology sector is uniquely sensitive to venture capital funding cycles. When VC funding contracts, startup customers face cash flow pressure that directly increases default risk on technology vendor receivables. Enterprise IT spending forecasts from analysts (Gartner, IDC) provide sector-specific forward-looking data. Interest rate environments affect the discount rate applied to future subscription revenues and indirectly affect customer payment behaviour. Technology-specific indicators include SaaS churn rates (a leading indicator of payment default for subscription receivables) and technology sector layoff announcements (signalling client budget cuts).

Key forward-looking indicators for technology:

  • Technology sector VC funding trends
  • Enterprise IT spending forecasts
  • Startup failure rates by stage
  • SaaS churn rate benchmarks
  • Technology sector employment data

Regulatory and Audit Context

Auditors of technology companies should evaluate the appropriateness of receivable segmentation and challenge whether a single provision matrix adequately captures the risk differential across customer types. For technology companies with significant revenue from IFRS 15 contracts, the interaction between contract assets and trade receivables is an audit focus area — contract assets require ECL assessment under IFRS 9 if the entity has an unconditional right to consideration. Common findings include: failure to separately assess startup customer receivables (which may have loss rates 3–5× higher than enterprise customers), inadequate historical data for new product lines or market segments, and insufficient forward-looking adjustment during technology sector downturns.

Technology companies with IPO or funding round receivables (amounts due from investors) should classify these separately from trade receivables and assess credit risk based on the investor's financial position and commitment terms.

Worked Example — CloudTech Solutions B.V.

CloudTech Solutions B.V. provides enterprise SaaS and professional services with €3.2M in trade receivables. The customer base comprises 380 SaaS subscription customers (€2.1M, 66%) and 25 enterprise project customers (€1.1M, 34%). Startup customers (15% of total) carry higher credit risk but are included in the collective matrix given the diversified base. Neutral FL factor reflects stable enterprise IT spending.

Bucket Amount Rate ECL
Not yet due €2.100.000 0.20% €4.200
1–30 days €560.000 0.50% €2.800
31–60 days €280.000 1.50% €4.200
61–90 days €140.000 5.00% €7.000
91–180 days €80.000 12.00% €9.600
180+ days €40.000 35.00% €14.000
Total €3.200.000 €41.800

Forward-looking adjustment factor: 1× applied to all buckets. Rates shown above are adjusted rates (historical × FL factor).

Typical receivable profile: Technology receivables include SaaS subscription invoices (recurring, predictable), enterprise project-based receivables (lumpy, high-value), and channel partner/reseller receivables. SaaS receivables are typically short-duration with automated billing, while enterprise project receivables may have extended payment terms and milestone-based billing.

Frequently Asked Questions — Technology

Should SaaS subscription receivables and project receivables be assessed separately?
Yes, this is recommended when the risk profiles differ materially. SaaS subscription receivables are recurring, small-value, and subject to automated dunning — loss rates are typically low (0.1–0.5% for current). Enterprise project receivables are higher-value, subject to acceptance testing and milestone disputes, and carry 2–3× higher loss rates. Running separate provision matrices (or at least different loss rate columns within one matrix) produces a more accurate ECL estimate than a blended approach.
How should startup customer receivables be treated for IFRS 9 ECL?
Startup customers represent higher credit risk due to elevated failure rates — seed-stage startups have an approximately 60% failure rate over 3 years. If startup customers are a significant portion of the receivable portfolio, consider either: (a) applying a higher loss rate uplift to the provision matrix for the startup segment, or (b) specifically assessing large startup receivables individually. The forward-looking adjustment should consider current VC funding conditions, as startup defaults tend to cluster during funding downturns.
What is a typical ECL rate for technology company trade receivables?
Effective overall ECL rates for technology companies typically range from 0.8% to 2.5% of total gross receivables. SaaS-heavy businesses are at the lower end, while project-based businesses with diverse customer quality (including startups) are at the higher end. These rates assume stable technology market conditions — during sector downturns (e.g., post-bubble corrections), rates can increase 2–3×.
How do IFRS 15 contract assets interact with IFRS 9 ECL for technology companies?
Contract assets under IFRS 15 (revenue recognised but not yet invoiced) are within IFRS 9 scope for ECL purposes if the entity has an unconditional right to consideration. For technology companies with significant unbilled revenue from long-term contracts, these contract assets should be included in the ECL assessment. However, the loss rate for contract assets may differ from invoiced receivables because the credit risk profile at the contract asset stage (work in progress) is different from the post-invoicing stage.
Should deferred revenue adjustments affect the IFRS 9 ECL calculation?
Deferred revenue (contract liabilities under IFRS 15) does not represent a financial asset and is not within IFRS 9 scope. However, if a customer has both a receivable balance and a deferred revenue balance, the question arises whether the receivable should be assessed gross or net. IFRS 9 requires gross assessment — the receivable is a financial asset and the deferred revenue is a contract liability, and they should not be netted for ECL purposes. The deferred revenue provides economic mitigation (if the customer defaults, the entity can stop providing the service) but does not reduce the IFRS 9 ECL measurement.

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