Subscription finance has two sets of numbers that must agree: the revenue the accounts recognise under IFRS 15, and the recurring revenue, churn and retention investors ask about. Naarvin keeps both from the same contracts: revenue recognised over time against what was invoiced, deferred revenue tied to the ledger, and an MRR bridge with net and gross retention. Runway and the investor update come from the same books.
What makes finance in a subscription business different?
- Invoices go out annually or upfront, but revenue is earned month by month.
- Deferred revenue in the ledger rarely agrees with the contract list.
- MRR, churn and retention live in a spreadsheet that does not agree with the accounts.
- Bundles and discounts make it unclear how much revenue belongs to each part of a contract.
- Investors want runway and retention every month, in a format that changes each round.
How does a subscription business run finance with Naarvin?
- Bring in the contractsContracts and subscriptions come from a file, or won deals come from HubSpot, Salesforce or Zoho CRM. Each invoice is linked to its contract.
- Recognise revenueThe contract price is allocated to each obligation by its standalone selling price, then recognised over time by day or at a point in time.
- Tie out deferred revenueWhat has been invoiced against what has been earned gives deferred revenue or unbilled revenue per contract, agreed to the ledger, with a true-up journal drafted for approval when they differ.
- Measure recurring revenueAn MRR bridge per customer shows new, expansion, contraction and churn, with net and gross revenue retention, logo churn and the quick ratio.
- Watch the runwayNet burn and runway come from the ledger and the forecast, with scenarios for hiring or a slower quarter.
- Update investorsThe investor update restates figures from the books, so the deck and the accounts agree.
Which numbers come out of the same contracts?
| Number | What it answers | Source |
|---|---|---|
| Recognised revenue | What was earned this month under IFRS 15? | Contracts, obligations and recognition schedules |
| Deferred revenue | What has been billed but not yet earned? | Invoices linked to contracts, tied to the ledger |
| Remaining obligations | How much contracted revenue is still to come, within 12 months and after? | Open contract obligations |
| MRR bridge | Where did recurring revenue grow or shrink? | Subscriptions and their changes |
| Net and gross retention | Do existing customers spend more or less over time? | The per-customer MRR bridge |
What do you need to start?
- Your accounting system connected, with the deferred revenue accounts identified.
- Your contracts and subscriptions as a file, or your CRM connected for won deals.
- The standalone prices of what you sell, if contracts bundle several items.
- Your forecast assumptions for runway.
Who is this for?
SaaS companies, subscription and membership businesses, and service firms with multi-year contracts, especially those reporting to investors. A business that sells one-off products for cash does not need contract accounting.
Questions people ask
Does Naarvin read our accounts from the CRM?
No. CRMs load won deals as contracts; your books still come from your accounting system. The two are linked through the invoices.
Will our MRR agree with recognised revenue?
They measure different things, but both come from the same contracts, so the differences can be explained line by line rather than reconciled by hand.
Does Naarvin post the revenue journals?
It drafts them for approval. They go to your ERP only after approval, once your admin turns sending on.
Can we show runway to investors?
Yes. Net burn and runway come from the ledger and the forecast, and the investor update carries them.