Teardown
Why your ARR is three different numbers
Ask three people at your SaaS company what your ARR is, and you'll get three answers. That's not a data-quality problem to be embarrassed about — it's arithmetic. Here's why the numbers diverge, and how to tell which one is right.
The CFO quotes one number in the board deck. The VP of Sales quotes a bigger one in the QBR. Finance's billing system shows a third. Nobody is lying, and nobody is wrong — they're each reading a different stage of the same revenue. The trouble starts when someone has to reconcile them under a board-meeting deadline and can't say, in one sentence, why they don't match.
Let's take them one at a time, using a representative $4.9M-ARR SaaS company.
The three numbers
Three systems, three grains, one company. A $156,000 spread from top to bottom — about 3.2% of ARR. Big enough that if two teams quote different ends of it in the same meeting, someone loses trust in all of it.
Why they diverge
The spread isn't noise. It's the sum of two legitimate, explainable timing gaps — and once you name them, the whole thing reconciles.
1. Closed-won in the CRM, not yet billing. Sales marked the deal won, but it hasn't been provisioned into the billing system yet — a late paperwork step, a start date in the future, a hand-off that slipped. In our example that's $84,000 across 3 accounts. Real revenue, sitting between "sold" and "invoiced."
2. Billed, but not yet recognized (deferred). You've invoiced it, but under ASC 606 you can only recognize revenue as you deliver it — so annual prepayments and mid-period starts sit in deferred revenue until they're earned. Here, $72,000 is billed-but-deferred. This gap is supposed to exist; it's correct accounting.
(There's arguably a fourth number: cash. Even the $4,812,000 you billed isn't the $4,812,000 you collected — subtract aged AR, failed payments in dunning, and disputes and you get a smaller number again. That's the "ARR is growing but the bank balance isn't" conversation, and it's a whole teardown of its own.)
So which one is right?
All of them — for different questions. Quote bookings to measure the sales team. Quote billings to plan cash and headcount. Quote recognized revenue to the board, your auditor, and any acquirer's diligence team, because it's the one that's GAAP-defensible.
"Which number is right" is the wrong question. The right question is: can you reconcile them in minutes, and does every figure trace to the exact rows that produced it? If yes, the three numbers are a feature — a clean view of revenue at every stage. If no, they're a standing liability that surfaces at the worst possible moment: the board meeting, the audit, the data room.
How to reconcile it in practice
The manual version is what most RevOps and finance teams actually do: export the CRM, export billing, pull the GL, line them up in a spreadsheet, and hunt down the deltas by hand — usually the Friday before the board call. It works, but it's slow, it's stale the moment it's done, and it lives in one person's head.
The durable version is a standing reconciliation with three properties:
Tie out, top to bottom. Bookings → billings → recognized, as a bridge, so the spread is always a sum of named steps — never an unexplained gap.
Itemize every delta. "$84,000 not yet billing" is a shrug; "these 3 accounts, closed-won on these dates, not yet provisioned" is an action item you can hand to ops.
Cite every figure. Each number should link to the exact query and source rows behind it — so when someone asks "does this tie out?" the answer is "yes, and here's why," not "let me get back to you."
Do that, and the three-numbers problem stops being a problem. You stop reconciling and start reporting.