Overview
Fincelo maintains a real-time ARR waterfall — every movement in and out of ARR is tracked to its source with full audit trail. The waterfall feeds the CFO Morning Brief, NRR calculation, and churn predictions.ARR Waterfall Components
| Movement | Definition | Trigger |
|---|---|---|
| New ARR | ARR from first-time customers | New contract activated |
| Expansion ARR | ARR increase from existing customers | Seat addition, tier upgrade, usage upgrade |
| Contraction ARR | ARR decrease from existing customers | Seat reduction, downgrade (not full churn) |
| Churned ARR | ARR lost from full terminations | Contract terminated |
| Reactivated ARR | ARR from previously churned customers | Customer returns |
| Renewed ARR | ARR from contracts renewing at same value | Renewal at same terms |
ARR vs Revenue — Critical Distinction
ARR and revenue are tracked independently in Fincelo:- ARR decrements on the actual termination date — always
- Revenue recognition depends on CFO view selection:
- View A (no refund) — revenue recognised through original end date
- View B (refund issued) — revenue stops at termination, credit note raised
NRR Calculation
- Customer level
- Cohort level (by acquisition month)
- Plan/tier level
- Overall workspace level
Contraction vs Churn
These are separate waterfall buckets:- Churn = full termination (customer leaves entirely)
- Contraction = partial reduction (customer reduces seats/tier but stays)
ARR Anomaly Detection
The Revenue Anomaly Agent monitors:- Unexpected ARR movements above statistical threshold (Z-score > 2)
- ARR that doesn’t match invoiced amounts
- Expansion signals from usage data
- Customers approaching usage limits (tier-based alerts)