Framing revenues and MRR – ARR

Learn how to compare your internal data (ERP, billing tools) with the indicators calculated by Fincome. Identify and analyze discrepancies to ensure the reliability of your finance reporting

In managing a recurring-revenue business, it is not uncommon to observe differences between the figures from your internal billing system (ERP, billing tool, etc.) and those calculated by Fincome. These discrepancies can be explained by the way each system calculates recurring revenue and handles certain specific items. For example, Fincome by default deducts discounts applied to customers when calculating MRR, and does not include non-recurring (one-shot) billing in MRR. Your ERP or billing tool may, on the other hand, include these items in its revenue reports, which leads to different figures.

Why perform a reconciliation?

This allows you to compare your internal data (sales, billing, MRR from the ERP, etc.) with Fincome’s data in order to identify the source of discrepancies. The goal is to ensure that variations are justified (for example a discount applied, a one-off invoice, a period shift...) and not the result of an integration or configuration error. By regularly reconciling your revenues and your MRR/ARR, you increase confidence in Fincome’s data and can explain differences to your finance teams or investors clearly and transparently.

Steps to reconcile revenue in Fincome

To reconcile your figures (or “frame” your revenues) between your source system and Fincome, follow the steps below:

  1. Choose a month for comparison. Select a specific month on which you want to perform the data comparison. It is advisable to pick a recent month (for example, the last closed month) or a month where you have identified notable discrepancies. Working month by month makes analysis easier, as you isolate a specific period before possibly moving on to the next ones.

  2. Extract data from your source system. From your ERP, billing software or any internal repository, export the revenue data for the chosen month. Ideally, obtain the list of your customers with the amount of recurring revenue billed that month. Save this data, for example in an Excel file, with a Client ID column (or client name) and a Source Revenue – Month X column.

  3. Export Fincome data for the same month. Log in to Fincome and go to the Data tab > Export Center > MRR by client for each month. You should obtain a similar table, with a Client ID column and a Fincome MRR – Month X column.

  4. Compare the MRR totals from both sources. Before diving into client-by-client detail, it is useful to compare the total MRR according to your source and according to Fincome for the chosen month. Sum the revenue column from your source system, then the MRR column from Fincome. This will give you two totals to confront.

For example, you may find that your ERP reports €100,000 of recurring revenue in September, while Fincome shows €98,000 of MRR for the same month. A global difference of €2,000 therefore exists for the month – the reconciliation will help break down this difference by client.

  1. Align and compare data client by client. Using a spreadsheet, merge or align the source list and the Fincome list based on the client identifier (for example client ID, company name, or any common identifier). The goal is to have, for each client, the MRR according to the source and the MRR according to Fincome side by side. If a client appears in one system and not the other, note it as well (this may indicate that a client without a recurring subscription is excluded from Fincome, or that data is missing in one of the two systems). Then calculate the difference (Delta) for each client, for example: Delta = Fincome MRR – Source revenue for the month. A zero difference means Fincome matches your internal figure exactly for that client, while a positive or negative delta indicates a discrepancy to explain.

  2. Identify and categorize discrepancies. For each client where a discrepancy is observed, investigate the cause and assign a category to that discrepancy. Here are the most common causes:

  • Discount applied: if your billing system shows a lower amount than Fincome for a client, this may come from a commercial discount. Fincome, depending on settings, may present MRR net of discounts while your ERP shows the invoiced amount after discount, or vice versa. Identify whether the client had a promotion or discount that month

  • One-off / non-recurring: when the source shows revenue but Fincome shows €0 for a client, this often corresponds to a one-off (non-recurring) invoice. Fincome does not include non-recurring items in MRR. This one-time revenue (e.g.: setup fees, exceptional sale) thus explains why Fincome MRR is lower than the billing figure observed for that client

  • Timing difference: a discrepancy can come from a timing difference in revenue recognition. For example, if an invoice was issued in a different month (billing delayed or advanced), or if a subscription starts mid/late month, timing can cause Fincome’s MRR to diverge from the ERP revenue for that specific month

  • Calculation settings or missing data: in some cases, none of the above points explains the discrepancy. Then make sure that Fincome settings (Settings > Calculation options) are consistent with your billing method (e.g.: churn accounting date, consideration of credit notes, etc.). If a client has an unexplained discrepancy, check that all their invoices/subscriptions are correctly accounted for on both sides

By categorizing each difference this way, you will obtain a clear view of the sources of discrepancies between your two repositories. Most often, a few major causes explain the bulk of the total discrepancy, which allows you to focus your analysis on the points that really matter (for example, a particular client or a specific type of operation).

To help you reconcile, you can complete this Excel template:

25KB
Cadrage.xlsx

Useful links

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