This method is normally used if a trend is identified, for example that an average of 2% of the total of the credit sales for the past 2 years is bad debts. If the total credit sales for a specific financial year or an accounting period are R(£) 100 000, the provision for bad debts is R(£) 2 000 (calculated as 2% of R(£) 100 000). This is a very simple method for calculating or estimating the provision for bad debts. On the other hand it bears no relationship to the amount owing by the debtors.