Is "closed" paid or just contract signed?

[heartfelttech]

Hi, I'm new to using a pipeline model and hoping to set this up in the most useful way.

I've seen some examples where "closed" means "delivered", but in my busniess there's a large gap between "agreed on" and "delivered" - I write software and agreeing to pay for work can happen quite a way before actually paying. 

So, does a deal "close" when it's signed off and copied over to my project management software or does it "close" when the project's finished?  Thanks!

[MFrankJohnson · Accepted solution]

Q: So, does a deal "close" when it's signed off and copied over to my project management software or does it "close" when the project's finished??

Short A: Totally depends on how you run your business.

Longer A:

Disclaimer: Observations and opinions expressed here are those of the author and are not intended as legal or financial advice. And, we are not employed by HubSpot.

In most US and international jursidictions we've worked 'Closed Won' in HubSpot means a legal binding agreement has been executed. IOW - the contract has been signed "on the line which is dotted".

For many HubSpot clients this also means some or all of the deal revenue has been collected -- how much totally depends on the contract. Some contracts don't require payment at signing; some contracts require 100% payment at signing; and others may require some amount in between. (very important for revenue reporting)

We have seen cases when 'Closed Won' means 'delivered', but that delivery is rarely tied to revenue. These are typically cases where a HubSpot portal is using a deal pipeline to simply track delivery of service -- the revenue for which is tracked either in another pipeline or outside of HubSpot -- a common occurrence.

Example:
Client pays ANNUALLY for pool cleaning (100% in advance -- to make this example easier to digest).
- A deal in the HubSpot 'Pool ANNUAL CONTRACT' Pipeline would be 'Closed Won' each year for this customer --- WITH revenue attached.
Vendor 'delivers' pool cleaning every month.
- A deal in the HubSpot 'Pool MONTHLY CLEANING' Pipeline would be 'Closed Won' each month for this customer as the service is delivered -- WITHOUT revenue attached.

[This is just an example for purposes of illustration. The actual method used to track service in HubSpot may vary widely depending on your HubSpot plan.]

A couple things to keep in mind when using 'Closed Won' ...
- Closed Won (in any deal pipeline) changes the Lifecycle stage to Customer for the associated company and contact(s).
- see What happens when a deal’s stage is changed to 100% (closed won) or (0% closed lost) in HubSpot CRM?

- Closed Won also reports 100% of the deal amount as revenue on Revenue Reports in HubSpot. This is typically where things go badly if your business process for handling deals in HubSpot isn't clearly defined.
-see Report on revenue in HubSpot
 

Finally, as you can see, it's totally up to you how to use HubSpot deal pipelines. However, it's typically bad practice to promote deals to 'Closed Won' stage (WITH revenue attached) if that revenue hasn't been collected or at least contracted for in some legally binding way -- aka: signed for "on the line which is dotted"!

Does any of that crazy talk make sense?

Always happy to help you build on HubSpot.

Best,
Frank

---

www.MFrankJohnson.com

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[heartfelttech]

Thanks Frank. What do you mean by “with revenue attached” vs without in hubspot terms? Is it the amount field set vs blank? A convention for deal types? 

[MFrankJohnson]

>>What do you mean by “with revenue attached” vs without in hubspot terms? Is it the amount field set vs blank? A convention for deal types? 

Yes, "With revenue attached" means the amount field set to a value greater than $0. Revenue reporting will use any value placed in that field to calculate forecasted AND 'Closed Won' revenue reported in HubSpot.

This is particularly problematic if we set a deal value (say $1000) and don't collect the funds, but close the deal as 'won'. In HubSpot this will be reported as $1000 revenue for the timeframe during which that deal was closed.

Example:

We close that $1000 deal in HubSpot on 15-December, but don't collect the funds until the following January. It makes our December numbers artifically high (by $1000) and our January number inaccurately low (by $1000).

If used incorrectly, this could also add friction to the process when determining if/when to pay sales commissions. And the accountants will want our heads for misreporting our month end / year end closing numbers! haha 😉

[heartfelttech]

Thank you, I get it now. I’d like if it was more flexible but at least I know how it is 🙂