Foreign exchange impact (FX)
This article presents how Fincome takes into account the impact of exchange rates (FX) in your subscriptions and reporting, and explains how to read the displayed variations.
1. Foreign exchange (FX) impact – Principles, calculations and interpretation in Fincome
Conversion at issuance date: each line (invoice or credit note) is converted into your reporting currency at the ECB rate of the issuance day.
Monthly vs annual:
Monthly subscription → a new rate applies each cycle → the MRR fluctuates with the foreign exchange market.
Annual subscription → a single rate for the whole period → the MRR remains stable from month to month.
Operational interpretation : in the MRR/ARR Movements view, an FX effect isolates the pure currency impact of the monthly variation (separate from organic business changes).
Exports : the fx_rate_applied column documents the rate used line by line.
2. Scope: where FX is involved in Fincome
Covered by FX conversion:
MRR / ARR : Fincome recognizes MRR/ARR from amounts already converted at the issuance date (invoices and credit notes).
MRR/ARR Movements : the monthly change is decomposed into Business impact (New / Expansion / Contraction / Churn) and FX effect (pure currency effect).
Exports : the line-level detail including the
fx_rate_appliedfor internal audit and reconciliation can be provided on request.Original amounts (in the billing currency) are not modified: the conversion is calculated and stored separately for reporting.
Customer context: multi-currency management and isolation of the FX effect are part of the functional scope deployed with our mid-market/enterprise customers (e.g., multi-entity and multi-currency environments, cases covered in our business cases).
3. Source of rates and application rule
→ Source : Fincome retrieves the EUR/XXX fixing from the European Central Bank daily (publication ~16:00 CET).
→ Time of application : when synchronizing an invoice or a credit note, the original amount is converted at the issuance day rate and stored.
→ Immediate consequence:
Monthly: at each cycle, the subscription “takes” the rate of the current month.
Annual: the subscription “remains” at the rate of the invoice issuance date.
4. Numerical example
Assumption:
2 subscriptions denominated in USD: $100 monthly + $100 annual
Reporting currency: EUR
EUR/USD end Jan 24: 1.07
EUR/USD end Mar 24: 1.15
Impact in Fincome:
Jan 24
200 $
€93.46
€93.46
€186.92
Mar 24
200 $
€86.96
€93.46
€180.41
Difference (FX)
—
– €6.50
€0.00
– €6.50
→ In euros, the MRR curve drops by €6.50, while nothing has changed on the customer side: this is 100% FX.
Simplified formula for the FX effect (EUR/USD)
Let rₘ = EUR/USD rate for month m, then for a constant MRR of $100:
FXₘ (€) = 100 × (1/rₘ - 1/r₍ₘ₋₁₎)
Example: Jan → Feb 2024 if r_jan = 1.07 and r_feb = 1.12 100 × (1/1.12 – 1/1.07) ≈ 100 × (0.8929 – 0.9346) = – €4.17
Interpretation: when the EUR appreciates (EUR/USD ↑), $1 is worth fewer €, so MRR in € decreases (negative effect).
Good Board practice: to present organic performance, show the ARR bridge cleansed of FX impacts.
5. How to read the MRR/ARR Movements view
→ For each frequency (monthly, quarterly, annual), Fincome calculates:
Business impact (New / Expansion / Contraction / Churn): change related to the business (price, quantities, upgrades/downgrades), already converted at the issuance-day rate of the relevant invoices.
FX effect : pure currency variation between the start and end of the period, at constant MRR in the original currency.
→ Quick diagnostic: if Business impact = 0 and ΔMRR_total ≠ 0, the change comes exclusively from FX.
6. Points of attention
Oscillation is not "an error": a monthly MRR in a foreign currency mechanically moves in the reporting currency, even without commercial activity.
Annual ≠ Monthly: if you prebill annually, the MRR recognized in the reporting currency remains stable (a single conversion rate).
Credit notes: a credit note issued later is converted at the credit note’s issuance-day rate — its effect can be seen both in Business impact (credited amount) and in FX effect (if the rate has changed).
Traceability: check the rate applied in your exports via
fx_rate_applied; keep this file as an audit piece.Security and compliance: data and exports are encrypted in transit and at rest in accordance with our internal security policy.
7. FAQ
→ Where do the exchange rates used come from? Fincome retrieves the EUR/XXX fixing published daily by the European Central Bank (~16:00 CET). Each invoice/credit note line is converted at the issuance-day rate, and this converted amount is stored and then used for MRR/ARR recognition.
→ My subscription is in USD, my reporting currency is EUR: what varies? • Monthly: at each cycle, the new invoice “takes” the rate of the current month → MRR in EUR can vary solely due to FX. • Annual: the annual invoice “locks” the rate of its issuance day → MRR remains stable in EUR over the period (excluding business movements).
→ Why is my MRR curve in EUR falling even though no customer churned? This can be an effect related to FX fluctuations. Example (reporting in EUR) : $100 monthly, EUR/USD goes from 1.07 (Jan.) to 1.12 (Feb.) Jan: 100/1.07 = €93.46 Feb: 100/1.12 = €89.29 Δ FX = – €4.17 without any change on the customer side.
→ Where is the FX effect visible in Fincome? In MRR/ARR Movements, Fincome systematically separates: • Business impact (New / Expansion / Contraction / Churn) – converted at the invoice-day rate. • FX effect – pure currency variation between the start and end of the period.
→ How to reproduce the “FX effect” in Excel for a stable monthly subscription?
If the price in the original currency is constant (e.g. $100), the monthly contribution of the exchange effect between m₁ and m₂ is:
FX (€) = Amount in currency × (1/tₘ - 1/t₍ₘ₋₁₎)
E.g. Jan → Feb 2024: 100 × (1/1.12 - 1/1.07) ≈ – €4.17.
→ Do credit notes (credit memos) follow the same logic? Yes. A credit note is converted at its issuance-day rate (like an invoice) and impacts the Business movements of the relevant month; any variation due to the foreign exchange market remains isolated in Businessof the concerned month; any variation due to the FX market remains isolated in FX effect.
→ Can I change the reporting currency? Yes, by contacting support. An option will soon be available in Settings › Reporting currency. Dashboards and exports will align with the chosen reference currency.
→ How to “neutralize” the FX effect for a board or an executive committee?
Two operational options:
• Business view : use the drawers New/Expansion/Contraction/Churn and ignore FX effect in the narrative.
• Numeric series : export and subtract the fx_effect column to present an “FX-neutralized” MRR/ARR.
→ Where to check the rate actually applied per line?
In all detailed exports: consult the fx_rate_applied (ECB rate of the issuance day stored by Fincome). Contact Fincome support if needed.
→ Does the FX effect impact my efficiency KPIs (NRR, expansion, contraction)? Yes, the FX effect impacts all your activity KPIs. An option will soon be available in Fincome to analyze your KPIs cleansed of exchange rate variations.
→ Why does the FX effect seem to affect only part of my base? • Monthly subscriptions “take” a rate each cycle → sensitive to FX month by month. • Annual subscriptions are insensitive to intra-year FX (rate locked at invoice), hence a different mix of effects depending on your subscription structure.
→ I backdated / reissued an invoice: what happens on conversion? The line is (re)processed at the ECB rate of the invoice’s or credit note’s issuance day. Storing the converted amount guarantees the reproducibility of your MRR/ARR figures.
→ What audit granularity is available if an auditor challenges me?
• Rate applied per line: fx_rate_applied.
• Monthly bridge: separation Business / FX effect.
• Traceability: conversion performed at ingestion and then stored (reproducible identically on export).
→ Security and compliance: are conversion data and exports protected? Yes. Data are encrypted in transit and at rest, managed within a structured security framework (access policies, vulnerabilities, continuity) and governed via a formalized risk governance. Your team can request access to our security policies.
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