The new trend is to ‘sell’ subscriptions, and have companies pay on a monthly basis. The ‘old’ business though, is about selling packages of goods and services as ‘one off’. Of course, you’d like to be modern and go with the trend. But at the end of the month, the reports don’t look that well to you – and to your boss.
Monthly recurring revenu is about recurring numbers, so that’s great. But the monthly numbers are much lower now – typically 10% to 15% of the former one-off invoices. And that looks bad in the reports. There is only three ways to cope with this issue:
- Sell annal recurring revenu instead of monthly. You can still indicate monthly rates, but be very clear that only the annual subscription is available. This is the easiest way, since you actually convert monthly recurring into a kind of ‘one-off’.
- Convert the monthly recurring into a forecasted one-off, by multiplying the monthly subscription fee with the estimated number of months the fee will be payed later on (and do not count the monthly fee of next month double!). This is only possible when your reports are for follow-up only. Be careful to check whether your report has no legal side-effects.
- Count the one-off’s as recurring. Be sure that all the reports, targets, bonus system, etc are aligned with the recurring reporting system from the beginning of the accounting period. This will probably require you to talk to the CFO.
Want to know more about the way to change your reporting? Check with Forte.