How to you calculate net credit loss?

Net credit loss is calculated by taking the total amount of credit losses incurred during a specific period and subtracting any recoveries from those losses. To determine this, identify the total write-offs from bad debts and then deduct any amounts collected on previously written-off accounts. The formula can be expressed as: Net Credit Loss = Total Credit Losses - Recoveries. This metric helps assess the effectiveness of credit risk management in a business.