The sun is shining, the birds are chirping, it’s finally Summer! ☀
While most teams can take some much-deserved time off, I know all too well that for Finance and RevOps it can be business as usual.
So for the next few weeks, I’m going to be dropping some hot tips from my years working with these teams that can help get your metrics in order, reduce manual review times, and get these teams out and enjoying the sun!
Let’s start with a simple one that can have a big impact.
Hot Tip # 1: Make sure the start and end dates of your yearly contracts actually equals one year.
Seems simple, right?
The impact of one day less or one day more can be very destructive on your ARR waterfall, and will have your ARR moving in all kinds of weird directions.
Let’s take an example: you have a one year contract starting on July 1st, 2024. Depending on how the end date is set, here’s what it is saying from a Finance perspective:
❌ July 1, 2024 to July 1, 2025 = 1 yr + 1 day…
2 options here:
(1) either your renewal is set for July 1, 2025 to July 1, 2026, in which case, you may double count ARR in July 2025.
(2) or your renewal is set for July 2, 2025 to July 2, 2026, effectively shifting the renewal date by one day every year. Your ARR is now lowered because we’re considering 366 days instead of 365.
❌ July 1, 2024 to June 29, 2025 = 1 year – 1 day…
If your renewal date is July 1, 2025, then your ARR waterfall will show that the Customer was actually lost for a day (no coverage on 06/30) and then came back as a new customer July 1 2025 upon renewal. So churn in June, new in July, just because of that 1 day!
✅ July 1, 2024 – June 30, 2025 = exactly 1 year = ARR will be properly allocated within the correct timeframe and your waterfall will show a continuous and accurate story for this client.
It may seem like a no-brainer but with busy revenue teams, new sales staff, and (hopefully) lots of new contracts being continuously created, it isn’t always as standardized as it should be.
This simple consideration can reduce hours of manual review by Finance teams constantly on the hunt for discrepancies and keep your numbers tidy and accurate.
Be back next week with another tip but if you have questions in the meantime, leave a comment, DM me, or book some time with me through the link above, let’s get you on a (stress-free) vacation this summer! 😎