Business Tools Blog

Where to start?

I thought I’d start with first page ever posted on Zayo’s Intranet. We have Lexicon built around financial definitions. We want everyone to have a reference to key business terms.

• Billable Run Rate: The value of one full month’s billing for all active MRR service orders. 
• Gross Sales: An order that has been signed by the customer and accepted by service activation.  The dollar value of a gross sale is equal to the monthly recurring price that the customer will pay for the service (includes reduction for any discounts)  Gross Sales include any dollar changes to orders, prior to install.
• Cancels: An order that is cancelled prior to install for any gross sale counted in a previous month.
• Net Sales: Gross Sales less Cancels
• Install Pipeline: All services that have been recorded as net sales, that have not yet installed
• Gross Installs: All services that have been installed, tested, accepted by the customer and entered into the billing system
• Disconnects: All services that stop billing
• Rate Changes: All services that have a positive or negative change to monthly recurring billing in a given month
• Net Installs: The change in Billable Run Rate for a given month.  This number should equal Gross Installs, less Disconnects +/- Rate Changes.
• Pro-Rates: A partial month’s billing for services installed or disconnected that month.
• Backbills: Billing for services earned in prior months
• Credits: Service, goodwill, billing error or other credits given to customers in the current month
• Revenue Reserves: Reserves held to offset known billing or non-payment issues.  Revenue Reserves are typically held when a customer files for bankruptcy or otherwise indicates that they will not pay for service.
• Regulated Revenue: Regulated Inter and Intrastate Originating and Terminating Revenue
• Usage Revenue: Services billed based on a customer’s monthly usage.
• Termination Revenue: When a customer terminates a contract prior to the end of their contract, they are billed termination fees.  These are recognized when the revenue is collected.
• Amortized Install Revenue: Installation charges are amortized over 24 months.  Example: if we billed a customer $240 this month for an install charge, we would recognize $10 in revenue per month for the next 24 months.
• Amortized IRU’s: IRU’s are Indefeasible Rights of Use (long-term lease aka temporary ownership of a portion of the capacity) these are amortized over the term of the lease. Example: a $1.2M IRU with a 10 year term, would amortize at $10K per month for 10 years.
• Construction Revenue: Revenue paid for construction or for joint build fees.  This revenue is not related to any ongoing service and is recognized in the month that construction completes.
• Financial Statement Revenue: (FSR) is equal to Billable Run Rate at the beginning of the month +/- pro-rates, plus backbills, less credits, less revenue reserves, plus regulated revenue, plus usage revenue, plus termination revenue, plus amortized installs, plus amortized IRU’s, plus construction revenue +/- other adjustments
• Network Expense: network costs directly associated with billed revenue.  These include third party offnet circuit charges, IRU costs, Colocation Rents, Switch Rents, and Fiber Leases.
• NetEx BRR: The value of one full month’s billing for all active Network Expense obligations
• Amortized Install Charges: Installation charges for circuits are billed by third party vendors are typically amortized over 24 months and are part of Network Expense.
• Financial Statement Network Expense: NetEx is equal to NetEx BRR at the beginning of the month  +/- pro-rates, plus backbills, less credits, less disputes, plus dispute reserves, plus regulated costs, plus usage, plus termination fees, plus amortized installs, plus amortized IRU’s, plus construction fees, plus professional service fees, plus late fees, +/- other adjustments
• Gross Margin: Gross Margin is equal to Financial Statement Revenue less Financial Statement Network Expense
• SG&A: Selling, General and Administrative Expenses.  SG&A is broken into (1) Personnel and Contractor Expense, (2) Network Operations Expense (3) Other SG&A
• Personnel and Contractor Expense: includes wages, paid time off, car allowance, bonus, overtime, commissions, contract labor expense, and benefits expense.
• Network Operations Expense: includes Pop Rents, Utilities, Right of Way, Franchise Fees, Network Repairs & maintenance, Locates, Emergency Restoration, Fiber Relocation, Network Vehicles Costs, Network Related Shipping, and Network Rentals
• Other SG&A: includes Agent Commissions, T&E (Travel and Entertainment), Marketing, PR, Website, Office/Warehouse Rent, Office Supplies, Office Cleaning, Office Utilities, Hardware and Software Maintenance, Telephone, Cell Phone, Internet, LAN/WAN, Insurance, Training & Education, Business Taxes, Corp and Professional Fees, Recruiting, Relocation, Bad Debt, Tools and Small Parts and Misc. Other Expenses

These definitions are not universal across companies. I would be interested in other company’s definitions for these terms – if they are different.

How do other companies communicate their Lexicon to employees?