Three metrics, three different stories about your business health.
MRR — monthly recurring revenue
MRR is the sum of active recurring ClientServices divided out per month. A $95/week mowing contract is 95 × 52 ÷ 12 = $411 MRR. A $135/month pool maintenance is $135 MRR.
What to watch:
- Trend direction — is it going up or down? Healthy shops grow MRR 2-4% month-over-month.
- Churn — the drop from month N to month N+1 from cancellations. Healthy = <5%/month for residential.
- Net adds — new MRR minus churned MRR. Positive in growth mode, flat in mature.
AR aging
The distribution of unpaid invoices across age buckets. Buckets:
- Current — not yet due. Usually the majority; nothing to worry about.
- 1-30 days overdue — normal cadence. Dunning is handling.
- 31-60 days — needs attention. Consider a phone call.
- 61-90 days — likely to not collect. Consider pausing service or sending a demand letter.
- 90+ days — almost certainly bad debt. Consider writing off.
The share of A/R in the 60+ buckets is the single best predictor of collection pain. If more than 12-15% of your A/R sits 60+ days overdue, your collections process is broken somewhere.
Collection stats
- Collection rate: collected ÷ invoiced this month. Healthy = 90%+.
- DSO (Days Sales Outstanding): avg days from invoice issue to payment received. Healthy = 15-20.
- Same-week collection rate: % of invoices paid within 7 days of issue. Auto-pay heavy shops run 80-90%; no-auto-pay shops run 35-55%.
The actionable moves
When you see numbers that concern you, here is the diagnostic ladder:
- Low collection rate? Check dunning is actually firing. Settings → Notifications → verify
invoice.reminderis on. - High DSO? Push card-on-file adoption. Shops with 60%+ of clients on auto-pay have DSO under 10.
- Growing 60+ AR bucket? Review those invoices. Write off or send a demand letter per invoice.
- Falling MRR? Pull the client list; check who cancelled. Look for patterns (bad season, specific service line).