Best Practices for Reporting ARR and Discounts

When managing Annual Recurring Revenue (ARR), it is crucial to understand whether to report revenue before or after discounts. Some founders opt to report ARR before discounts, while others suggest integrating discounts as a separate line item for clarity. Adopting co-terminus contracts, where upsell contracts match the start and stop dates of existing contracts, simplifies reporting and ensures accurate financial representation. Ultimately, revenue should reflect what customers actually pay, emphasizing that the invoice cycle should not dictate the recognition of recurring revenue.