Why does Fincome calculate MRR and ARR?

Fincome's mission is to centralize billing data (Stripe Billing, Chargebee, Hyperline, Sellsy, Pennylane, incoming APIs) and standardize its reading in order to provide in real time the key indicators of SaaS growth: MRR, ARR, churn rate, NRR, projections, forecast scenarios, etc. A consistent calculation of MRR/ARR regardless of your PSP (payment service provider) is essential to ensure the consistency of your reporting. Indeed, without uniform rules:

• Financial reporting becomes difficult to reconcile with operational reporting
• The breakdown of movements (New MRR, Expansion, Churn) can be distorted
• Investors struggle to compare your performance to their internal benchmarks

Definition and usefulness of MRR

MRR (Monthly Recurring Revenue) represents the monthly recurring revenue generated by your subscriptions. It is in a way the "monthly snapshot" of the company's recurring revenue. Concretely, the MRR of a given month is the sum of all subscription amounts brought back to one month of service (amounts excluding tax spread pro rata over the month concerned).

MRR is calculated from the invoice lines and the period of each subscription. The formula used is:

MRR = Σ (Monthly value of each active subscription)

i.e.:

MRR = Σ ( Subscription amount excluding tax ÷ Subscription duration in months )

MRR is a central indicator in SaaS, which is used in particular to:

• Track the company's growth trajectory, month after month
• Analyze the quality of the customer base by breaking down the evolution of MRR: new sales (New MRR), expansions (upsells), contractions (downsells), and churn, as well as the impact of foreign exchange (FX) effects

MRR is not prorated: this means that the entire value of a subscription is counted as soon as the subscription is active, even if it starts or ends in the middle of the month.

Example: A customer subscribes for €100 per month on March 15th. The MRR for March will include the subscription in full, even though the subscription only starts halfway through the month.

MRR calculation methodology in Fincome

Fincome calculates each month's MRR following a rigorous process, aligned with SaaS best practices. The calculation steps are as follows:

1. Identification of the service period: each billing line is processed according to its service start and end date (start_date and end_date). Example: an annual invoice from January 1st to December 31st covers 12 months of service.
2. Monthly spread: the invoice amount is spread equally over each month of service covered. This amounts to dividing the amount excluding tax by the number of months of the covered period. Example: €1,200 excl. tax over 12 months gives €100 of MRR per month.
3. Currency conversion (source: Open Exchange Rate): if your invoices are issued in another currency, Fincome converts the amounts into the reporting currency using the exchange rate at the start of the period (ECB rate on day 1). Example: 100 USD billed on May 15th, with a EUR/USD rate of 1.10, are converted to ~€90.91 of MRR.
4. Exclusion of non-recurring revenue: non-recurring billing items are excluded from the MRR. For example, one-off fees (setup fees, training, hardware, exceptional credits) are excluded and do not generate MRR. Example: a training billed at €2,000 will be counted as €0 in the MRR, because it is one-shot (non-recurring) revenue.
5. Churn recognition: Fincome applies a configurable churn recognition rule, in order to determine at what point the MRR is reduced in the event of a subscription cancellation. Depending on the chosen rule, the loss of MRR can be recorded at the termination request date, at the cancellation's effective date, or at the end of the current period. Example: for a subscription canceled on May 15th with a term ending June 30th, the loss of MRR will be recorded either on May 15th, May 31st, or June 30th, depending on the defined churn rule.

To learn more about churn recognition, you can read this article from the Help Center.

Atypical period cases

In some cases, the billing duration does not match the standards (monthly, quarterly, semi-annual, or annual). Fincome then applies a proration rule to determine the monthly MRR:

• If the number of days of the period is within ± 4 days of one of the standards [30, 60, 90, 180, 365], then the duration is rounded to the corresponding whole number of months (1, 2, 3, 6, or 12 months).

• Example: a period of 89 days is rounded to 3 months.
• In other cases, Fincome uses the following formula:

MRR = (Amount excl. tax × 30.437) / Number of days of the period
(30.437 corresponds to the average duration of a calendar month.)

This calculation is Fincome's default mode.

Alternative option: calculation based on plan frequency

If the default proration does not suit your needs, you can enable an alternative mode:

• This mode relies on the frequency entered in your plans (monthly, quarterly, annual, etc.).
• It is more precise as long as your plans are properly configured.

From MRR to ARR

ARR (Annual Recurring Revenue) is quite simply the MRR expressed on an annual basis. The formula is: ARR = MRR × 12. This indicator aggregates your monthly recurring revenue level into an annualized projection, useful for communicating the size of your annual recurring revenue. For example, an overall MRR of €85,000 per month corresponds to an ARR of about €1,020,000 (85,000 × 12).

By mastering these different indicators, you will have a complete view to steer your SaaS's growth. Fincome helps you automate these calculations and visualize them clearly, in order to support your financial analyses, your forecasts, and your strategic decisions.

Updated on: 03/07/2026