> ## Documentation Index
> Fetch the complete documentation index at: https://docs.fincelo.app/llms.txt
> Use this file to discover all available pages before exploring further.

# Glossary

> Every term used in Fincelo — precisely defined for finance teams.

**ARR (Annual Recurring Revenue)**: the annualised value of all active subscription
contracts. Decrements on actual termination date. Independent of revenue recognition.

**MRR (Monthly Recurring Revenue)**: ARR ÷ 12. The monthly equivalent.

**NRR (Net Revenue Retention)**: (Opening ARR + Expansion − Contraction − Churn) ÷
Opening ARR. Measures revenue retention including upsells. Above 100% = growing
without new customers.

**Deferred Revenue**: cash received or invoiced for services not yet delivered.
Lives on the balance sheet (liability) until the service period begins. Then
recognised into P\&L (revenue) on a straight-line basis.

**ASC 606**: US GAAP revenue recognition standard. 5-step model:
(1) Identify contract, (2) Identify performance obligations, (3) Determine
transaction price, (4) Allocate price, (5) Recognise when/as obligations satisfied.

**IFRS 15**: international equivalent of ASC 606. Same 5-step model.

**Period close**: the process of finalising accounting records for a month.
After close, entries require special approval to post. Fincelo's 3-path resolution
handles this (Path A/B/C based on materiality).

**Proforma invoice**: a billing intent document. Not a Tax Invoice. Has no
invoice number, no GST liability, not entered in GSTR-1. Converts to Tax Invoice
when the billing trigger event occurs.

**Place of supply (GST)**: determines whether a transaction is intra-state
(CGST+SGST) or inter-state (IGST). Determined by comparing your GSTIN state
against customer's registered state.

**TDS (Tax Deducted at Source)**: tax deducted by the customer before paying you.
Under 194J(b) (SaaS default), rate is 2% on technical services.
₹100 invoice → customer pays ₹98, deposits ₹2 with the government in your name.
You claim ₹2 as credit via Form 26AS.

**194J(b)**: the TDS section applicable to most SaaS companies. Technical services
at 2%. Post Budget 2020 split from 194J. Distinguished from 194J(a) which covers
professional services at 10%.

**Dunning**: systematic process of communicating with customers to collect overdue
payments. Fincelo supports 10 action types per step across Standard, Enterprise,
and Aggressive templates.

**Payment score (0–100)**: AI-calculated creditworthiness score per customer.
Drives automatic dunning template assignment. Factors: payment history,
days overdue average, broken payment promises, recent trend, disputes.

**Revenue Quality Score**: single score (0–100) measuring the quality of the
ARR base. Factors: NRR, collection efficiency, customer concentration, renewal rate,
average payment score. Calculated by the CFO Co-pilot.

**Renewal health composite score**: score 1–100 per contract measuring renewal
probability. Factors: payment score, product usage, QBR engagement, support sentiment,
contract tenure. Calculated by the Renewal Agent.

**CLV (Customer Lifetime Value)**: estimated total revenue from a customer over
their lifetime. Calculated by Customer Intelligence Agent from ARR × predicted tenure × NRR probability.

**ICP (Ideal Customer Profile)**: the characteristics of the highest-value,
highest-retention customer cohort. Derived by Customer Intelligence Agent from
analysis of the full customer base.

**Revenue leakage**: the gap between what should have been billed and what was
actually billed. Detected by Customer Intelligence Agent: under-billed seats,
missed escalations, unapplied price reviews.

**Agent outcome learning**: the mechanism by which agents learn from their own
history. Actions that led to positive outcomes are weighted higher in future.
Compounds over 6+ months of operation.

**Z-score baseline**: statistical method for anomaly detection. Measures how many
standard deviations an observation is from the rolling mean. Anomalies flagged
above 2 standard deviations. Adapts automatically as the business grows.

**Domain event**: a record written to the `domain_events` table when a significant
event occurs. All modules and agents subscribe to relevant events. No direct
module-to-module calls — everything routes through the event bus.

**View A**: revenue recognition treatment for terminated contracts where no refund
is given. Revenue recognised through original contract end date.

**View B**: revenue recognition treatment for terminated contracts where a refund
is given. Revenue stops at termination. Credit note for unused period.

**Ratchet clause**: contract term that prevents billing from dropping below the
previous period's level. Detected by AI scanning for: minimum guarantee users,
minimum agreed headcount, minimum agreed licenses, floor quantity, base commitment.

**Magic link**: secure, time-limited URL sent to the customer's onboarding POC.
Valid for 24 hours. Used for KYC form access.

**FX gain/loss**: difference between INR value at invoice date FX rate and INR
value at payment date FX rate. Posted to Other Income / Finance Costs — NOT revenue.

**SSP (Standalone Selling Price)**: the price at which a product or service would
be sold individually. Used for revenue allocation when a contract has multiple
performance obligations.

**SEZ (Special Economic Zone)**: government-designated zone. Supplies to SEZ are
zero-rated under GST. LUT/Bond required. GSTIN mandatory.

**ISD (Input Service Distributor)**: GST registration for companies that receive
services centrally and distribute ITC to their branches.

**IRN (Invoice Reference Number)**: unique identifier generated by the IRP (Invoice
Registration Portal) for e-invoices above the threshold. Mandatory for B2B invoices.
Can only be cancelled within 24 hours of generation.

**LUT (Letter of Undertaking)**: declaration filed with GST authorities allowing
export of services without paying IGST. Required for overseas and SEZ invoices.
Valid for one financial year.

***

*Fincelo — Knowledge Base v3.0
Build in India · For the World
Covers: 7 agents · 34 enhancement capabilities · 128+ platform files · 13 TDS sections · 10 GST treatments*