Ann: Quarterly Activities/Appendix 4C Cash Flow Report, page-137

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kevg91

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16/02/23

13:28

Post #: 66287480
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Originally posted by Techmeister: ↑

You can scream and bleat all you like about ACV - but unless you realise its a very rough guesstimate of what the business will do in the future - you will miss the point!

ACV is not an actual number - it is a guess at to how much contracted clients will spend over the next 12 months. There is tons of room for error here:
• client spend is lumpy
• projected work gets delayed
• clients need to do other stuff before work OR pay actually happens...
• your key champion in the client moves on...
• and so on....

The only purpose of ACV is to give a forecast - over a time frame - if it proves wrong then too bad - as a SH perhaps you can choose to discount this by 50% - or just not even bother thinking about it - and focus on revenue in the quarterly

Imagine Woolies saying to a customer 'what are you going to spend in store in the next 12 months?' - and they say well I spend on average $200 week - so take that and multiply by 52 - and the very next week they discover ALDI - that's what you're dealing with!!!!

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That's right! The WOW example is a bit extreme but simplistic enough for the regular punter.

ACV = total contract value ÷ number of years

Contracts can be generally be cancelled at any point.

Same with ARR, MRR, TCV, etc etc. It's all marketing, nothing is ever fixed, "recurring" or 100% certain.

Last edited by kevg91: 16/02/23

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Ann: Quarterly Activities/Appendix 4C Cash Flow Report, page-137

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Ann: Quarterly Activities/Appendix 4C Cash Flow Report, page-137

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