MRR Reconciliation: Build an Opening-to-Closing MRR Bridge
An MRR report is only trustworthy if the opening balance, plus every change, equals the closing balance. This guide walks through one month for a small fictional company: ten accounts, every kind of movement, and the billing traps that make invoice totals look nothing like MRR.
Download the ledger: spreadsheet with live formulas (.xlsx) · CSV. All figures are fictional.
The account ledger for March
Each account's MRR at the start and end of the month, the change, and the bucket that change belongs to. Annual plans are divided by 12; one-time fees are never MRR.
| Account | Opening MRR | Closing MRR | Change | Bucket | Why |
|---|---|---|---|---|---|
| A. Acme Dental | $500 | $500 | $0 | No change | Monthly plan, no change. |
| B. Birch Logistics | $1,000 | $1,300 | +$300 | Expansion | Annual plan of $12,000 counts as $1,000 a month. Added seats for $300 a month, billed monthly. |
| C. Cedar Legal | $800 | $500 | −$300 | Contraction | Moved to a smaller plan. |
| D. Delta Studio | $400 | $0 | −$400 | Churn | Cancelled. |
| E. Elm Clinics | $1,200 | $1,200 | $0 | No change | Annual renewal invoice of $14,400 at the same price: no change in MRR. |
| F. Fir Retail | $600 | $600 | $0 | No change | One-time $2,000 onboarding fee for a new location is not MRR. |
| G. Grove Fitness | $300 | $0 | −$300 | Churn | Cancelled. |
| H. Harbor Tech | $0 | $900 | +$900 | New | New customer at $900 a month; the $1,500 setup fee is excluded. |
| I. Ivy Schools | $0 | $500 | +$500 | New | New annual plan of $6,000, paid upfront, counts as $500 a month. |
| J. Juniper Cafe | $0 | $250 | +$250 | Reactivation | Cancelled last November and came back this month. |
| Total | $4,800 | $5,750 | +$950 |
The opening-to-closing bridge
| Opening MRR | $4,800 |
|---|---|
| + New | $1,400 |
| + Expansion | $300 |
| + Reactivation | $250 |
| − Contraction | $300 |
| − Churn | $700 |
| = Closing MRR | $5,750 |
$4,800 + $1,400 + $300 + $250 − $300 − $700 = $5,750, which matches the $5,750 you get by adding up every account's closing MRR. If the two ever differ, an account is missing from a bucket or sits in two.
Each movement, with one account
- New
- Harbor Tech: a first-time customer, +$900. Its setup fee stays out.
- Expansion
- Birch Logistics: an existing customer paying more, +$300.
- Reactivation
- Juniper Cafe: a former customer who came back, +$250. It is its own line, not new business and not a reduction in churn.
- Contraction
- Cedar Legal: an existing customer paying less, −$300.
- Churn
- Delta Studio: a cancellation, −$400.
- No change
- Acme Dental: same price all month, whatever was invoiced.
Why the billing export doesn't match
This month the company invoiced $26,950, but closing MRR is $5,750. The difference is timing and one-time charges. A billing export is a good starting point; it is not an MRR report.
| Account | Invoiced in March | Closing MRR |
|---|---|---|
| A. Acme Dental | $500 | $500 |
| B. Birch Logistics | $300 | $1,300 |
| C. Cedar Legal | $500 | $500 |
| D. Delta Studio | $0 | $0 |
| E. Elm Clinics | $14,400 | $1,200 |
| F. Fir Retail | $2,600 | $600 |
| G. Grove Fitness | $0 | $0 |
| H. Harbor Tech | $2,400 | $900 |
| I. Ivy Schools | $6,000 | $500 |
| J. Juniper Cafe | $250 | $250 |
| Total | $26,950 | $5,750 |
The $21,200 gap comes from five accounts:
- Elm Clinics: annual renewal billed in full: +$13,200 over its MRR.
- Ivy Schools: annual plan paid upfront: +$5,500 over its MRR.
- Fir Retail: one-time onboarding fee: +$2,000 over its MRR.
- Harbor Tech: one-time setup fee: +$1,500 over its MRR.
- Birch Logistics: annual plan billed in an earlier month; only the new seats were invoiced: $1,000 under its MRR.
$22,200 of extra billing, less $1,000 billed in an earlier month, is the $21,200 difference.
What the bridge tells you
- GRR = ($4,800 − $300 − $700) ÷ $4,800 = 79.2%.
- NRR = ($4,800 + $300 − $300 − $700) ÷ $4,800 = 85.4%. New and reactivated customers stay out.
- Customer churn = 2 of 7 starting customers = 28.6%. The returning customer is reported separately.
A book this small swings sharply from one cancellation; the point is the method, not the rates.
Find the three errors
For the same month, a first draft of the report showed:
| Opening MRR | $4,800 |
|---|---|
| + New | $8,400 |
| + Expansion | $300 |
| + Reactivation | $0 |
| − Contraction | $300 |
| − Churn | $450 |
| = Closing MRR | $12,750 |
Show the answers
- New MRR includes Harbor Tech's $1,500 setup fee. Setup fees are one-time, not recurring.
- New MRR counts Ivy Schools' $6,000 annual payment in full. Divide annual plans by 12: $500 a month.
- Churn is shown as $450 because Juniper Cafe's return was subtracted from churn. Report reactivation as its own line: churn $700, reactivation $250.
Corrected, the bridge is the one above: closing MRR $5,750.
Related: ARR (twelve times this MRR on a run-rate basis), revenue churn, and the GRR vs NRR comparison.
Sources and methodology
The references below explain the underlying methods. Our worked scenarios use hypothetical figures; they are not company results or current market benchmarks.
- Stripe: Monthly recurring revenue
Definition and recurring versus nonrecurring revenue.
- ChartMogul: Gross MRR Retention report
Retention excluding expansion and reactivation.
- ChartMogul: Net MRR Retention cohort
Following recurring revenue from the same customer cohort.
- ChartMogul: Revenue churn (net and gross revenue churn rate)
Gross and net MRR churn formulas, the fixed opening revenue base, and the distinction from customer churn.
Found an error or a definition that differs from your reporting? Send a correction with the page URL and the method you use.