Recurring subscription revenue | General Excel Questions & Answers

Recurring subscription revenue

jon999

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September 1, 2016 - 7:40 pm

I have to work out a rolling forecast for subscription revenue.

I have a start date and end date but once that end date finishes the subscription will start again.

So need to calculate the unearned revenue each month.

For example

Start date: 1/7/16

End date: 30/6/17

Amount: 1200

Therefore at the end of July 16 the amount should be 1100 then August 1000 and so on until June 17 when the amount will be zero. Then July 17 shows 1100 August 17 1000 and so on.

I have different starts dates and end dates for example to be unable to do the calculation

1/7/16 - 30/6/17

1/7/17 - 30/6/18

26/7/16 - 25/8/16

1/7/16 - 30/6/18

15/9/16 - 14/11/16

Thanks

Jon

Frans Visser

Duivendrecht (near Amsterdam) - The Netherlands

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September 3, 2016 - 8:27 am

Lot's of people looking, but no answers I see.

I tried some things, but am not finished. You explained the case rather well.

First thing you can do to get the result you want is to add the original amount to your formula and substract that with the formula you already have.

I'm not sure if the approach you chose is the right one, so I am trying with some other things, but don't have a clue at the moment. Will be back later, ifn't somebody has given you 'the' solution.

jon999

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September 3, 2016 - 10:21 am

Hi Frans

Thanks for replying to me post.

I have updated the spreadsheet with a calculation using MOD that works if the period is only 3 months but does not work if it is more than three months. This might help you work it out.

Thanks

Jon

Frans Visser

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September 4, 2016 - 5:20 am

I made a little progress and like to share that with you.

I used your last example file.

I think I tackled the difficulty of the check of date with the 'AND' function.

I also used the method descriped above for getting the right amount as you want.

Didn't solved everything at this moment, so where it stops I gave it the text 'next stap'.

Maybe this already helps, but I try going further of course!

SunnyKow

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September 5, 2016 - 11:21 am

From the title of the post, it said recurring subscription revenue (i.e. revenue earned for each month) but the example given below looks like a reducing balance.

Start date: 1/7/16 End date: 30/6/17 Amount: 1200 Therefore at the end of July 16 the amount should be 1100 then August 1000 and so on until June 17 when the amount will be zero. Then July 17 shows 1100 August 17 1000 and so on.

Base on this, the figures should be like July 1100, Aug 1000, Sept 900 etc. If that is the case then the amount of 1200 should be divided equally among the number of months between 1/7/2016 to 30/6/2017 (12 months = 100/month).

The worksheet given have a totally different calculation altogether. It is not practical to have an indefinite schedule with months as the header. When will it end? I could be wrong but that is what I understand from the question posted.

If the periods need to be repeated, I would suggest to have another row instead of continuing in the same row (since the amount could also be different as stated in your wroksheet).

I have attached a file on what I have done so far. Don't know if it will help.

Frans Visser

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September 6, 2016 - 2:22 am

SunnyKow wrote: "From the title of the post, it said recurring subscription revenue (i.e. revenue earned for each month) but the example given below looks like a reducing balance".

That's exactly I thought first, but realised that jon999 maybe explained in the wrong way and wanted to have something which in fact is counting real days off. So I worked that out.

I'm interested in the reaction of jon999 on both mine effort as the one of SunnyKow!

jon999

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September 6, 2016 - 9:12 am

Hi SunnyKow and Frans

Thanks for your replies.

Sorry that my heading post may have been confusing, it should have had unearned revenue.

What I am trying to do is a 2 year forecast and therefore when a subscription ends it will be renewed for the same amount and for the same period. So if a subscription is for 3 months every 3 months it will renew. And trying to find the unearned revenue closing balance at the end of each month.

The problem with inserting a new row for each subscription is I have over 6,000 rows at the moment and I have different start and end dates. For example I might have one subscription that goes for 1 month, another for 3 months, another for 1 year etc. so having to inserting all the rows would be hard.

It needs to be based on days as you can only recognise revenue based on the number of days. So if the subscription starts on the 15 July 2016 you can only recognise 17 days and not the full month.

I hope this helps, if not please ask more questions as I am only to happy to help.

Thanks

Jon

SunnyKow

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September 6, 2016 - 11:42 am

Hi Jon

Let's say the subscription of 1,200 is for 3 months, renewable for the next 2 years, can you not put the start date and end date like this:

Start Date : 01/07/2016

End Date : 30/06/2018

Total subscription : 9,600 (i.e. 1,200 X 8)

then spreading it across the 2 years?

Sunny

jon999

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September 6, 2016 - 12:14 pm

Hi Sunny

I wish it was that easy but the problem is I need the closing balance each month to put to the Balance Sheet. Therefore the way you have suggested would work if I did not need the closing balance each month, but this will overstate the unearned revenue on the balance sheet.

For example (just a quick way to show it based on months not days but need it based on days)

July 2106 Unearned revenue $800 (1,200/3*2) (the way I need it)

July 2016 Unearned revenue $9,200 (9,600 - 400) (your way)

That is why I need to "re-issue" the invoice once the subscription has ended in my model.

Hope this make sense.

Thanks

Jon

Mynda Treacy

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September 7, 2016 - 1:18 pm

Hi Jon,

See example attached. I've added two helper columns that calculate the contract total as at the end of month you choose (in cell D2) and the balance as at the end of that month.

If you want to see the result for every month all at once then you can combine the formulas into one as per rows 23:27.

Hope that gets you on the right track.

Mynda

jon999

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September 7, 2016 - 5:30 pm

Hi Mynda

Thank you so much for replying to my question.

You sure did help me on the right track. I just made a small change to your formula as in your spreadsheet cell AD25 has 1,002.74 however should be 2.74. It had to do with the days calculation so had too put in another IF statement.

Also thanks to Sunny and Frans for also helping me out.

Kind regards

Jon