What are Provision Elements

Provisions are a type of Expense Element that can be added to various folders in the Chart of Accounts, including Direct Costs, Overheads and Other Expenses.

You can use this element to model contingency expenses and liabilities in Castaway.

Expenses created via a Provision element are essentially noncash expenses that are recorded in the Profit and Loss (P&L) report, without impacting your cash balance.

These expenses give rise to provision liability in the Balance Sheet that accrues and accumulate until you write them off.

Once the contingency or liability actually occurs, you can then write off the liability in the Provision element.

How to create a Provision Element

To create a Provision element in Castaway, follow these steps:

  1. Go to the Forecast
  2. Click on Element Settings on the left-hand side
  3. Choose the appropriate expense section (e.g. Direct Cost, Overheads or Other Expense) for the Provision element
  4. Hover over the section where you want to add the element. This will reveal a "+" icon, which you can click to open a pop-up menu list. From this menu, select Provision to add the element
  5. Enter a name for your Provision element and press Enter to save

provisions element layer 3.png


Once you create this element, you can click to open it and adjust the element settings and provision type before adding your data.

You're able to change the Provision Type to either:

    • Doubtful Debt: To record general doubtful debts
    • Inventory Writedown: To record general Inventory obsolescence
    • Staff: To record staff liabilities such as Provision for Long Service Leave, Annual Leave, Sick Leave, and other staff entitlements
    • Other (general) provisions: To model any other type of provisions such as restructuring, legal settlements, warranties, and so forth

Modelling Example

In this example, we are creating a staff leave provision using manual data entry, recognizing $5,000 expense each month starting July 2023 and writing off $13,000 in December 2023 to model the annual leave payment expected over the Christmas holiday

To do this:

  1. Add a Provisions Element 
  2. Under the Account Type, set the Provision type to ‘Staff’
  3. From the Provision Expense Method, select ’Enter Provision’
  4. Set the Write Off Method to ‘Enter Write Off’
  5. Select the Balance Sheet Report location from the Current/non-current split 
  6. Add $5,000 in Enter Provision line for July 2023 and right-click and select Fill Right - Current Year from the popup action menu. This will populate the same value for the remaining periods in the current year
  7. Enter $13,000 in the Enter Write Off line for December (we’re assuming here that we’ll make a large cash payment to staff as they take leave)
  8. Review the Profit & Loss Report, the Balance Sheet, and the Cashflow Statement to confirm the numbers appear as you would expect

The process described above entails deducting $5,000 from the profit every month and accumulating the same amount each month in the Provision Liability account on the Balance Sheet. 

When $13,000 of annual leave is paid off, the accumulated balance in the provision liability account can be reduced by the same amount, resulting in a balance of $17,000 in December 2023 in the Balance Sheet report and a payment of $13,000 in the Cashflow report.