Recurring Revenue Forecast Model for a Technology Company

    What is a Recurring Revenue Forecast Model ? Recurring revenue forecast models are considered planning and analysis tools and are often used by sales executives and budgeting managers to estimate key subscription-related drivers for the current- and next year. Some of the key functionality in this type of model is that it can both be used to create forecasts and budgets, and it can be used for what-if modelling without storing the resulting data. The example below is driver-based where the user enters beginning customer count, churn, new customers, new ARR and ARR expansion in the yellow cells on the top. The model then automatically calculates all the rows below both for the current year and next year. The resulting metrics includes net customer count, renewal statistics, ARR, MRR and other statistics. You find an example of this type of input model below. Purpose of Recurring Revenue Forecast Models Companies use Recurring Revenue Forecast Models to enable managers to quickly analyze future potential revenues and related subscription metrics. When used as part of good business practices in a sales or FP&A department, a company can improve its revenue-related planning activities, from hiring to cash flow estimates as well as reduce the chances that managers make sub-optimal decisions due to lack of visibility into future subscription metrics. Recurring Revenue Forecast Model Example Here is an example of a Recurring Revenue Forecast Model for a Technology Company. [caption id="" align="alignnone" width="2560"] Example of a Recurring Revenue Forecast Model for a Technology Company Example of a Recurring Revenue Forecast Model for a Technology Company[/caption] You can find hundreds of additional examples here Who Uses This Type of Input model ? The typical users of this type of input model are: CFOs, sales executives, budget managers. Other Input model s Often Used in Conjunction with Recurring Revenue Forecast Models Progressive sales or FP&A Departments sometimes use several different Recurring Revenue Forecast Models, along with detailed subscription reports, recurring revenue dashboards, budget models, profit & loss and cash flow reports and other management and control tools. Where Does the Data for Analysis Originate From? The Actual (historical transactions) data typically comes from enterprise resource planning (ERP) systems like: Microsoft Dynamics 365 (D365) Finance, Microsoft Dynamics 365 Business Central (D365 BC), Microsoft Dynamics AX, Microsoft Dynamics NAV, Microsoft Dynamics GP, Microsoft Dynamics SL, Sage Intacct, Sage 100, Sage 300, Sage 500, Sage X3, SAP Business One, SAP ByDesign, Acumatica, Netsuite and others. In analyses where budgets or forecasts are used, the planning data most often originates from in-house Excel spreadsheet models or from professional corporate performance management (CPM/EPM) solutions. What Tools are Typically used for Reporting, Planning and Dashboards? Examples of business software used with the data and ERPs mentioned above are:
    • Native ERP report writers and query tools
    • Spreadsheets (for example Microsoft Excel)
    • Corporate Performance Management (CPM) tools (for example Solver)
    • Dashboards (for example Microsoft Power BI and Tableau)
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