Is Revenue Recognition Messing Up Your Retention Numbers?
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Is Revenue Recognition Messing Up Your Retention Numbers?
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Does your retention data feel off—or even meaningless—because of catch-up invoices, credit notes, or daily revenue recognition? In episode #301, Ben Murray explains how proper revenue recognition practices can sometimes interfere with clear retention reporting and what SaaS operators can do about it.
Learn how to build a pro forma MRR schedule that strips out accounting noise and gives you clean, consistent retention metrics you can actually rely on.
What You’ll Learn
- Why revenue recognition can distort retention metrics, even if your accounting is correct
- The difference between GAAP-based MRR and a pro forma MRR schedule
- How Ben built and used a pro forma model during a private equity exit process
- How to build your own pro forma MRR schedule using invoice data
- The critical role of invoice data as your source of truth
Tools & Resources
BackOfficeTools App: Upload your invoice data and generate retention metrics. Check out the tutorial here to learn more and sign up: https://www.thesaasacademy.com/offers/zz3ZR2WL
Key Quote from Ben
“We still follow proper revenue recognition, but when it comes to retention, sometimes we need a second view. A pro forma MRR schedule helps us cut through the noise.”