Software True-Ups: How to Prepare and Avoid Overpaying
What a software true-up is, how it works, and a 120-day preparation plan to make sure you pay only for what you actually deployed.
By the MI Solutions SAM team9 min read2 exhibits
A true-up is a periodic reconciliation, usually annual, in which you report how many licenses you have deployed and pay for any growth since the last count. It is common in volume agreements and enterprise agreements. It is also one of the easiest places to overpay, because the default is to report whatever your systems show, including leavers, duplicates and accounts nobody uses.
How a true-up works
During the term, you can usually add licenses as you need them without placing a separate order each time. At the true-up date, you declare the total deployed, and the publisher invoices the difference between that number and what you already paid for. Some agreements also allow a true-down, reducing quantities for subscription products at the anniversary, but the rules vary, so check yours.
Depending on the agreement, growth may be charged for the full year or prorated from the point the licenses were added. Either way, every user you report pays for at least part of a year, so every unnecessary user in the count is money spent for nothing.
Where true-up counts go wrong
Most overpayment at true-up is not a pricing problem. It is a counting problem. In a typical first review, the "raw" count from systems falls by a noticeable share once it is cleaned:
Exhibit 1
01Leavers still licensed
Accounts of departed employees counted as active users.
02Duplicate accounts
The same person counted twice in different systems or tenants.
03Test and service accounts
Counted as users when the agreement may treat them differently.
04Inactive users
Licensed people who no longer use the product. Reclaim before you count.
05Wrong product mapping
Users counted under a more expensive product or edition than the one assigned.
06Acquired entities
Users from an acquisition counted under your agreement before the contract terms have been checked.
A 120-day preparation plan
Exhibit 2
True-up versus true-down
True-up
True-down
Direction
Pay for growth
Reduce quantity
When
At the agreed reconciliation date
At an anniversary or renewal, if allowed
Who benefits
Publisher
You
What to check
Accuracy of the deployed count
Whether the contract permits it, and for which products
How MI One helps
Frequently asked questions
Can we reduce licenses at true-up?
Sometimes, for subscription products at the anniversary. Perpetual license true-ups usually only go up. Check your agreement.
Is a true-up the same as an audit?
No. A true-up is a contractual self-declaration. An audit is the publisher verifying compliance, sometimes with a third party.
What happens if we under-report?
It creates compliance exposure that may surface in a later audit, often at a higher cost.
Who should sign off the count?
The SAM manager prepares it, the product owner confirms it, and procurement or finance submits it, so more than one person has checked the number.
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