You have adopted Monthly Recurring Revenue as a core operating and reporting metric, but you use Quickbooks. Monthly Recurring Revenue may be your most important non-financial reporting metric, but you can't get it easily from Quickbooks. So, you turn to spreadsheets to crank out monthly recurring revenue numbers month after month. And, with this monthly exercise come monthly headaches in producing accurate reporting.
What is Monthly Recurring Revenue and why the challenges with QuickBooks?
The general concept is that Monthly Recurring Revenue is a measure of the predicable
and recurring revenue components of your subscription business.
For a term subscription model, Monthly Recurring Revenue is calculated using a monthly value derived by normalizing contract transactions. For instance, a $1,200 annual subscription has a monthly value of $100. This normalized value is not typically derived from actual revenue schedules, which include "noise" due to revenue recognition rules and methods employed. This normalized value is just a representation of the monthly value of a contract element during the life of the subscription. Unfortunately, you can't simply pull it from QuickBooks. You have to calculate it.
In a monthly subscription model, you use actual billed, invoiced, or paid fees in your Monthly Recurring Revenue calculation, which means you can use actual transactions from QuickBooks or even raw transactions from a credit card processor. However, what is important about Monthly Recurring Revenue is not a single number per se, but rather the momentum around the unique components of your monthly recurring revenue:
- Monthly Recurring Revenue from renewals
- Monthly Recurring Revenue from new sales
- Monthly Recurring Revenue from upgrades
- Monthly Recurring Revenue losses
Since it is extremely difficult to segment transactions in Quickbooks into these components, it is almost impossible to generate useful monthly recurring revenue reports using only QuickBooks transactions.
If you have a term subscription business or a monthly subscription business, Revenue Books makes it easy to generate your monthly recurring revenue reports for board and operations meetings. Whether you are a term subscription or a monthly subscription business, Revenue Books fills the information gap, making it easy to perform all the monthly recurring revenue analysis you need to make key business, financial, and operating decisions.