# Exchange rate impact (FX) ## 1. Foreign exchange (FX) impact – Principles, calculations and interpretation in Fincome * **Conversion at issue date:** each line (invoice or credit note) is converted into your reporting currency at the ECB rate on the issue date. * **Monthly vs annual:** * Monthly subscription → a new rate applies each cycle → *MRR varies with the foreign exchange market.* * Annual subscription → one single rate for the whole period → *MRR remains stable from one month to the next*. * **Operational interpretation** : in the MRR/ARR Movements view, an FX effect isolates the pure currency impact of the monthly variation (separate from organic business changes). * **Exports** : the fx\_rate\_applied column documents the rate used line by line. ## 2. Scope: where FX is involved in Fincome **Covered by FX conversion:** * **MRR / ARR** : Fincome recognizes MRR/ARR from amounts already converted at the issue date (invoices and credit notes). * **MRR/ARR Movements** : the monthly change is broken down into *Business impact* (New / Expansion / Contraction / Churn) and *FX effect* (pure currency effect). * **Exports** : the detail of lines including the `fx_rate_applied` for internal audit and reconciliation can be provided on request. * The original amounts (in the billing currency) are not modified: the conversion is calculated and stored separately for reporting. **Client context:** multi-currency management and isolating the FX effect are part of the functional scope deployed with our mid-market/enterprise clients (e.g. multi-entity and multi-currency environments, cases addressed in our business cases). ## 3. Source of rates and rule of application → **Source** : Fincome retrieves daily the EUR/XXX fixing from the European Central Bank (publication \~16:00 CET). → **Timing of application** : when synchronizing an invoice or a credit note, the original amount is converted at the rate of the issue date and stored. → **Immediate consequence:** * Monthly: at each cycle, the subscription “takes” the current month’s rate. * Annual: the subscription “stays” at the rate of the annual invoice’s issue date. ## 4. Numerical example **Assumption:** * 2 subscriptions denominated in USD: $100 monthly + $100 annual * Reporting currency: EUR * EUR/USD end Jan 24: 1.07 * EUR/USD end Mar 24: 1.15 **Impact in Fincome:** | Month | Total MRR (USD) | Monthly MRR (EUR) | Annual MRR (EUR) | Total MRR (EUR) | | --------------- | --------------- | ----------------- | ---------------- | --------------- | | Jan 24 | 200 $ | €93.46 | €93.46 | €186.92 | | Mar 24 | 200 $ | €86.96 | €93.46 | €180.41 | | Difference (FX) | — | – €6.50 | €0.00 | – €6.50 | → In euros, the MRR curve dips by €6.50, while nothing changed on the customer side: this is 100% FX. **Simplified formula for the FX effect (EUR/USD)**\ Let *rₘ* = EUR/USD rate for month *m*, then for a constant MRR of $100:\  `FXₘ (€) = 100 × (1/rₘ - 1/r₍ₘ₋₁₎)` **Example:** Jan → Feb 2024 if r\_jan = 1.07 and r\_feb = 1.12\  100 × (1/1.12 – 1/1.07) ≈ 100 × (0.8929 – 0.9346) = – €4.17 **Interpretation:** when the EUR appreciates (EUR/USD ↑), $1 is worth fewer €, so MRR in € decreases (negative effect). **Good Board practice:** to present organic performance, show the ARR bridge cleaned of FX impacts. ## 5. Reading the MRR/ARR Movements view → **For each frequency (monthly, quarterly, annually), Fincome calculates:** * *Business impact* (New / Expansion / Contraction / Churn): variation related to the business (price, quantities, upgrades/downgrades), already converted at the rate on the issue date of the invoices concerned. * *FX effect* : pure currency variation between the start and end of the period, at constant MRR in the original currency. → **Quick diagnosis:** if *Business impact* = 0 and ΔMRR\_total ≠ 0, the variation comes exclusively from FX. ## 6. Points of attention * The oscillation is not “an error”: a monthly MRR in a foreign currency moves mechanically in the reporting currency, even without commercial action. * Annual ≠ Monthly: if you prebill annually, the MRR recognized in the reporting currency remains stable (one single conversion rate). * Credit notes: a credit note issued later is converted at the rate on the credit note’s issue date — its effect can be seen both in *Business impact* (credited amount) and in *FX effect* (if the rate has changed). * Traceability: check the rate applied in your exports via `fx_rate_applied` ; keep that file as an audit artifact. * Security and compliance: data and exports are encrypted in transit and at rest in accordance with our internal security policy. ## 7. FAQ → **Where do the exchange rates used come from?**\ Fincome retrieves daily the EUR/XXX fixing published by the European Central Bank (\~16:00 CET). Each invoice/credit note line is converted at the rate on the issue date, and this converted amount is stored and then used for MRR/ARR recognition. *** → **My subscription is in USD, my reporting currency in EUR: what varies?**\  • Monthly: at each cycle, the new invoice “takes” the current month’s rate → MRR in EUR can vary solely due to FX.\  • Annual: the annual invoice “locks” the rate of its day → MRR remains stable in EUR over the period (excluding business movements). *** → **Why does my MRR curve in EUR decline even though no customer has churned?**\ It may be an effect related to FX fluctuations.\ **Example (reporting in EUR)** : $100 monthly, EUR/USD moves from 1.07 (Jan.) to 1.12 (Feb.)\  Jan: 100/1.07 = €93.46\  Feb: 100/1.12 = €89.29\  Δ FX = – €4.17 with no change on the customer side. *** → **Where is the FX effect visible in Fincome?**\ In *MRR/ARR Movements*, Fincome systematically separates:\  • *Business impact* (New / Expansion / Contraction / Churn) – converted at the invoice day rate.\  • *FX effect* – pure currency variation between the start and end of the period. *** → **How to reproduce the “FX effect” in Excel for a stable monthly subscription?**\ If the price in the original currency is constant (e.g. $100), the monthly contribution of the exchange effect between m₁ and m₂ is:\  `FX (€) = Amount in currency × (1/tₘ - 1/t₍ₘ₋₁₎)`\ E.g. Jan → Feb 2024: 100 × (1/1.12 - 1/1.07) ≈ – €4.17. *** → **Do credit notes (refunds) follow the same logic?**\ Yes. A credit note is converted at the rate on its issue date (like an invoice) and affects the month’s Business movements; any variation due to the foreign exchange market remains isolated in *Business*for the month concerned; any variation due to the foreign exchange market remains isolated in *FX effect*. *** → **Can I change the reporting currency?**\ Yes, by contacting support. An option will soon be available in *Settings › Reporting currency*. Dashboards and exports will align with the chosen reference currency. *** → **How to “neutralize” the FX effect for a board or an executive committee?**\ Two operational options:\  • **Business view** : use the drawers *New/Expansion/Contraction/Churn* and ignore *FX effect* in the narration.\  • **Numeric series** : export and subtract the column `fx_effect` to present an “FX-neutralized” MRR/ARR. *** → **Where to check the rate actually applied per line?**\ In all detailed exports: consult the column `fx_rate_applied` (ECB rate of the issue date stored by Fincome). Contact Fincome support if needed. *** → **Does the FX effect impact my efficiency KPIs (NRR, expansion, contraction)?**\ Yes, the FX effect impacts all your activity KPIs. An option will soon be available in Fincome to analyze your KPIs cleaned of exchange rate variations. *** → **Why does the FX effect seem to affect only part of my portfolio?**\  • Monthly subscriptions “pick up” a rate each cycle → sensitive to FX month by month.\  • Annual subscriptions are insensitive to intra-year FX (rate locked at the invoice), hence a different mix of effects depending on your subscription structure. *** → **I backdated / reissued an invoice: what happens on the conversion side?**\ The line is (re)processed at the ECB rate of the invoice or credit note issue date. Storing the converted amount ensures the reproducibility of your MRR/ARR figures. *** → **What audit granularity is available if the auditor challenges me?**\  • Rate applied per line: `fx_rate_applied`.\  • Monthly bridge: separation *Business / FX effect*.\  • Traceability: conversion performed at ingestion then stored (reproducible identically on export). *** → **Security and compliance: are conversion data and exports protected?**\ Yes. Data is encrypted in transit and at rest, managed within a structured security framework (access policies, vulnerabilities, continuity) and governed through a formalized risk governance. Your team can request access to our security policies. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. 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