Finance ops
Why your MRR never matches finance's number
Billing says one thing, the GL says another, and the board deck says a third. The gap is usually five predictable things.
Dana Whitfield5 min read
Every SaaS company eventually has the meeting. The CEO quotes MRR from the billing dashboard, the controller quotes recognised revenue from the ledger, and the head of sales quotes bookings from the CRM. All three are correct. None of them match. Half an hour disappears arguing about whose number is real.
MRR and revenue are different concepts. MRR is a forward-looking run rate of contracted recurring value. Recognised revenue is an accounting figure governed by ASC 606. They should be close, and the differences should be explainable line by line. When they are not, the cause is usually one of five things.
The five usual suspects
- Discounts: billing shows the list price, the ledger shows what was actually invoiced after a 20 percent first-year discount.
- Timing: a customer upgrades on the 28th. MRR moves today, revenue is prorated across two periods.
- Usage and overages: variable fees appear in revenue but are excluded from most MRR definitions.
- Failed payments: MRR may still count a past-due account while finance has reserved against it.
- Credits and refunds: issued in billing, booked in the ledger a week later, or never synced at all.
Agree on definitions before tools
The fastest fix is a one-page metrics glossary signed off by finance and RevOps. Decide whether MRR includes discounts at their discounted value (it should), when a past-due account counts as churned (we suggest after the final dunning attempt, typically 21 to 30 days), and whether usage minimums are recurring. Write it down and date it.
Then build a reconciliation bridge. Start with MRR at month end, multiply to a monthly revenue equivalent, and list each adjustment that gets you to recognised revenue. If the unexplained remainder is under one percent, you are in good shape. If it is larger, the bridge will show you exactly where to look.
The goal is not one number. It is several numbers with a clear, written path between them.
Make it a monthly habit
Run the bridge as part of close, not when an investor asks. It takes an hour once the definitions exist, and it builds the kind of trust that shortens due diligence from weeks to days. It also ends the meeting where three smart people argue about which correct number is the right one.
