How this calculator works
A write-off is a loss of profit, not of revenue. The cash gone is the full invoice, but what the business has to rebuild is the margin that invoice would have contributed. So the replacement figure is replacement sales = write-off ÷ net margin.
That division is why credit managers and sales managers so often talk past each other. At an 8% net margin, a $50,000 write-off needs $625,000 of additional sales to get back to where the business was — and those sales carry their own credit risk, their own carrying cost and their own collection effort. One avoided write-off is worth more than a great quarter of new business at the same value.
What to put in
Use net profit margin, not gross. Gross margin flatters the result because the write-off consumes overhead the business has already paid for. If you do not know your net margin, your controller does, and the number is usually smaller than the credit team expects.
Average order value converts the answer into something a sales conversation can use. “This account needs fifty-two more orders at no profit to break even” lands differently from a percentage.
What it does not tell you
It ignores recovery — some written-off balances are partially collected later — and it ignores the cost of the collection effort already spent before the write-off. Both push the true cost up rather than down, so treat the output as a floor.