A growing resource of terms, metrics and calculations for your growing business.
ARR Growth Rate is the growth in annual recurring revenue during a specific time period, usually over 12 months. It indicates the velocity of your business's growth.
Annual Recurring Revenue is the annualised form of Monthly Recurring Revenue (MRR). ARR helps assess the amount of revenue a SaaS firm generates in a year.
Average Revenue Per User (ARPU) is the average revenue generated from a paying customer. It is usually calculated each month to analyse the value generated by a customer.
Your average revenue is the revenue received per unit of output sold. If you know it, you can estimate your total revenue and then look into boosting profits.
BizOps are the activities that companies engage in as part of their daily business. BizOps can be a set of KPIs, a philosophy, or a number of things in between.
Bottom-up estimation is a crucial project management technique project managers use to estimate the total cost, resources required, and duration of completing a project.
Bottom-up budgeting is an approach in which each department projects expenses and revenues for a specific period and then passes them to senior management for approval.
Burn multiple is a capital efficiency metric that measures the amount a startup is burning to generate incremental dollars of ARR. The lower the Burn multiple, the better the operational efficiency of the SaaS startup.
CAC Payback Period is a measure of how many months it takes a company to generate enough revenue to break even on the cost of acquiring a customer.
Capital efficiency is an umbrella term used to describe how efficiently your company uses its invested capital to generate revenue.
Churn Rate is the rate customers drop off their subscription plan over a defined period. It is often expressed as a percentage of the acquired customers.
Customer Acquisition Cost (CAC) is the average estimated amount of money that a firm must spend to acquire a paying customer.
FP&A is more forward-looking, and accounting is focused more on recording historical transactions. But, neither is complete without the other.
Finance outsourcing is a cost-saving strategy that allows a business to benefit from specialized finance and accounting services without overspending.
Financial consolidation is the process by which companies combine their financial data from several different businesses, entities, subsidiaries or investments.
General and Administrative expenses as a percentage of revenue is the proportion of revenue spent on G&A expenditures over a certain period.
Net present value (NPV) is used to calculate the present value of future cash flows. It evaluates the value of a project, a business, or an asset.
Outsourced CFOs are financial experts who work as strategic financial consultants for businesses on a part-time or contracted basis.
Net Dollar Retention (NRR) shows the growth or shrinkage of your annual recurring revenue (ARR) or monthly recurring revenue(MRR) during a particular period.
An incremental budget is created by starting with the budget for the current period or actual performance and then adjusting it incrementally.
CFO dashboards are a digital display tool that holds all the financial information in one place and keeps everything visible. Including cash flow, revenue, costs, etc.
Lifetime Value of a Customer is a measure of how much revenue a company is estimated to make from a customer over their relationship.
Monthly Recurring Revenue (MRR) is your company’s monthly average recurring revenue. This metric covers subscriptions charges, service agreements, and other recurring fees.
Net Revenue Retention (NRR) is the percentage of recurring revenue maintained from current customers during a specific period. It’s one of the most important metrics in SaaS.
ROI and ROE are strong indicators of your business's overall health and performance. That information can be used to build your business strategy and improve the financial performance of your small or medium sized business.
Reforecasting in accounting refers to holistically reviewing an existing budget to accommodate significant changes in the projected revenue and expenditure.
Research and Development expenses as a percentage of revenue is the proportion of revenue spent on growth-related activities over a certain period.
Revenue vs. Profit (They're not the same)
A Rolling budget helps you prepare for the future by examining the past. It involves forecasting events and updating the budget every month or every quarter.
The Rule of 40 is a method for SaaS companies to measure the balance between growth and profitability. Any business fundraising needs to track this metric.
Runway is the amount of time a business can last without getting fresh capital. Knowing how to calculate your company's could help you from running out of money.
Your SaaS magic number measures the efficiency of every dollar spent on your sales and marketing efforts. Use it to make decisions about sales and marketing investments.
Sales and Marketing expenses as a percentage of revenue is the proportion of revenue spent on growth-related activities over a certain period.
Outsourced bookkeepers will handle bank reconciliation, take care of payroll, handle accounts receivable and payable, and will prepare financial statements.
Understanding what headcount planning is crucial for any founder trying to grow their business. Read this article to understand what it is and how it can help you.
A budget allocation plan is a blueprint of how much you can spend on a program, event, person, or product within a company. A good plan is realistic and transparent.
Three-way cash flow forecasts are a key component of business strategic planning but they can be confusing to set up. Learn an easy way to create one.
The topline and bottomline figures are two of the most important figures in your income statement. Learn what they are and how you can boost those numbers.
Unit Economics are simply the evaluation of financial performance of a single economic unit of value. Getting this metric right is critical for any business to be profitable.
What are the differences between a VC Principal and VC Partner? Discover the vital role each position plays and whom you should reach out to for funding
Total contract value (TCV) is a SaaS metric that deals with the total revenue generated from one contract, which in this case could be a customer.
Financial close is a continuous accounting process that describes all of the accounting tasks that need to be actioned up to the end of a specified period.
A rolling forecast is a form of budgeting and planning regularly updated to incorporate changing circumstances throughout the year instead of a static budget that covers a fixed period
Scenario Analysis guide for founders
ACV (Annual Contract Value) is a crucial sales metric that can help you evaluate the effectiveness of your sales strategy, especially if you're a SaaS company.
The quote-to-cash process identifies the entire customer lifecycle. This journey starts the moment your sales reps approach a buyer to introduce your product or service.
The quick ratio of a SaaS company is the most essential tool to measure its growth efficiency. It is calculated by evaluating the revenue inflows and outflows of a company.
Virtual CFO services offer a cost-effective way for small businesses to achieve future success at the fraction of the cost of hiring an in-house CFO.
