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Key takeaways
Short answer: ScaleXP calculates MRR from the invoices in Xero or QuickBooks Online. Each invoice line is spread across the months it covers, and MRR is the full-month recurring value of each customer in the revenue accounts you choose; ARR is MRR multiplied by 12. Each month's change is classified as new, upgraded (expansion), downgraded (contraction), lost (churn) or reactivated by fixed rules you can adjust.
This page sets out those rules, works through a USD example over three months, and explains why the ARR in your CRM and the ARR calculated from invoices can differ. It is written for finance teams, RevOps consultants and advisers who need to explain ScaleXP's numbers to a board, an investor or a client. The method described here comes from the ScaleXP help center, read on October 26, 2026.
ScaleXP imports invoices and credit notes from Xero or QuickBooks Online and spreads each invoice line across the months of service. It uses AI to read service start and end dates from the wording on Xero and QuickBooks invoices, and finance can set rules by account, by tier or by usage where the wording is not enough.
The same invoice data feeds four views on the Customers tab:
Because every view starts from the same invoices, any MRR figure can be expanded to the customers and invoice lines behind it.
MRR answers one question: what was the total recurring value of the customer base in a given month? Three rules shape the answer.
The report marked as the global default (the globe icon) drives MRR in every dashboard, metric and presentation, so changing its account filter changes MRR everywhere. Foreign-currency invoices are translated at the exchange rate your accounting system uses.
ARR is MRR multiplied by 12, calculated for each month separately. The ARR report uses the same revenue allocation and currency rules as the MRR report. It has its own account filter, so keep the MRR and ARR reports on the same accounts. A different definition of ARR can be set up in the metric library if your board uses one.
Each month, ScaleXP compares every customer's MRR with the previous month and places the change in one category. The table below shows the rules from the help center and the usual SaaS names.
| ScaleXP category | Usual SaaS name | Rule | Amount counted |
|---|---|---|---|
| New | New MRR | Revenue this month and none within the "Reactivated before" period | The customer's MRR this month |
| Upgraded | Expansion | MRR higher than last month | The increase |
| Downgraded | Contraction | MRR lower than last month, still above nil | The decrease |
| Lost or churned | Churn | No revenue for the number of months set in "Lost after" | Revenue in the last month with positive revenue |
| Reactivated | Reactivation | A lost customer with revenue again within the "Reactivated before" period | The customer's MRR this month |
Three settings control the edges:
A drop to nil or to a credit balance counts as lost, not downgraded. Customer counts follow the same rules: active customers this month equal last month's active customers plus new and reactivated customers, minus lost customers.
For definitions and formulas, see the library pages on monthly recurring revenue, expansion MRR, customer churn and revenue churn.
An illustrative company has four active customers at the end of September 2026 (A to D), with MRR of $3,500. Two more appear later. The MRR report is set with "Lost after" at one month and "Reactivated before" at six months.
The table shows MRR by customer and the movement ScaleXP records each month.
| Customer | October | November | December |
|---|---|---|---|
| A | $1,200 | $1,200 | $1,200 |
| B | $1,000 (upgraded +$100) | $1,000 | $1,000 |
| C | $800 | $500 (downgraded −$300) | $500 |
| D | $600 | $0 (lost −$600) | $0 |
| E | $0 | $500 (new +$500) | $500 |
| F | $0 | $0 | $400 (reactivated +$400) |
| MRR | $3,600 | $3,200 | $3,600 |
| ARR (MRR × 12) | $43,200 | $38,400 | $43,200 |
The figures are illustrative. Each month's bridge reconciles: November opens at $3,600, adds $500 new, subtracts $300 downgraded and $600 lost, and closes at $3,200. Four points in the example show the rules at work:
Net revenue retention and gross revenue retention are then calculated from these movements; see gross and net revenue retention.
A CRM records commitments: ARR is usually a deal field entered by sales, or derived from the deal amount and term, and it counts from the close date. Invoice-based ARR records what is being billed and delivered. Both are useful, and they answer different questions. HubSpot's own contract reports make the same split between booked MRR and MRR that has become effective; see HubSpot Revenue Hub for SaaS finance. Continuing the example, suppose the CRM shows booked ARR of $55,200 at November 30.
| Item | ARR | Why it differs |
|---|---|---|
| Booked ARR in the CRM | $55,200 | Sum of active closed-won deals |
| Less: customer G, closed on November 20, starts January 1 | −$9,600 | Booked, not yet invoiced or in service |
| Less: customer D, still marked active in the CRM | −$7,200 | Churn not yet recorded by sales |
| Invoice-based ARR in ScaleXP | $38,400 | November MRR of $3,200 × 12 |
Other common reconciling items are set-up fees included in a deal amount (the CRM's total contract value can include recurring and non-recurring revenue), discounts or credit notes recorded only in the ledger, and upgrades agreed in the ledger but not in the CRM. Neither figure is wrong; the reconciliation is the useful output, because each line is something sales or finance can act on.
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When HubSpot, Salesforce or Pipedrive is connected, ScaleXP links CRM deals to the invoices in the ledger, either when ScaleXP creates the invoice from the deal or through invoice matching, where finance confirms which invoice belongs to each closed-won deal. ScaleXP flags closed-won deals that have not been invoiced, or invoiced for a different amount, and reports bookings, billings and recognized revenue side by side.
Customers choose the data source for each SaaS metric (accounting data, CRM or both). Teams that want a forward-looking view can add future invoices and renewals from their contracts to a separate report, keeping it apart from issued-invoice MRR. See SaaS metrics and reporting software for the product view and annual recurring revenue for the definition.
ScaleXP's MRR is the full-month recurring value of each customer, built from invoice lines in Xero or QuickBooks Online and limited to the revenue accounts you choose; ARR is that figure multiplied by 12. New, upgraded, downgraded, lost and reactivated movements follow published rules that each report can adjust. CRM booked ARR answers a different question, and reconciling the two shows which deals are not yet billed and which customers have left.
ScaleXP calculates MRR from invoice lines in Xero or QuickBooks Online, spread by service start and end dates rather than invoice dates. MRR is a full-month view: a customer's first month counts in full and a partial final month is excluded. Only the revenue accounts selected in the global MRR report are included, so one-off income stays out.
ARR is MRR multiplied by 12, calculated for each month separately. The ARR report uses the same revenue allocation and currency rules as the MRR report, with its own account filter that should match the MRR report. If your board defines ARR differently, a separate definition can be set up in the metric library.
A customer counts as lost, or churned, after a run of months with no revenue set by the report's "Lost after" setting, from 1 to 24 months. The lost amount is the customer's revenue in its last month with positive revenue. A drop to nil or to a credit balance is a loss, not a downgrade.
A reactivated customer is one that was lost and has revenue again within the "Reactivated before" period, counted from its last month of revenue. The help center gives a default of six months. A customer returning after a longer gap counts as new. Reactivated customers add to active customers but are not counted as new.
Set-up fees and other one-off items are excluded from MRR by account, and credit notes are netted off. Keeping recurring and one-time revenue in separate accounts in Xero or QuickBooks Online makes this a one-time choice in the MRR report's account filter, and new invoices then land in or out of MRR automatically.
CRM ARR counts deals from the close date, while invoice-based ARR counts what is billed and in service. Deals closed but not yet started, churn not recorded in the CRM, set-up fees inside deal amounts and credit notes recorded only in the ledger all create differences. Reconciling the two lists the deals to bill and the records to correct.
Yes. By default, increases and decreases smaller than 0.50 in your currency are ignored. You can set your own threshold by value or by percentage, for example to stop small exchange-rate movements counting as upgrades or downgrades, from the Customers page menu.
No. Customers choose the data source for each SaaS metric (accounting data, CRM or both): some run every metric from Xero or QuickBooks Online alone, others rely more on CRM data, and connecting a CRM extends the metrics. Zoho Books customers run every metric from their accounting data. MRR and ARR on this page are calculated from accounting invoices.
Sources (ScaleXP help center, read October 26, 2026): How to show a full month view of revenue (as used for MRR); How to define and report on ARR by customer; Customer page summary reports and how they are calculated; New versus reactivated customers; How to add or remove accounts from MRR and ARR; Difference between revenue recognition and MRR; Revenue setup 1: Configure and validate revenue recognition.
How ScaleXP does this
ScaleXP calculates MRR, ARR, churn, retention and more from your CRM and accounting data, with no spreadsheets. See ScaleXP’s SaaS metrics →
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SaaS metrics
See how ScaleXP calculates MRR, ARR and churn from the invoices in Xero or QuickBooks Online.
In a 15- or 30-minute demo, we’ll show the relevant workflows using example data and discuss how they could apply to your finance process. Complex requirements? Discuss them with us first.