Moss: Year to Date (YTD) - What Does It Mean and How Is It Used?

If you’ve spent any time working in a business or finance setting, you’ve probably come across the term ‘year to date’. It represents the period of time from the beginning of the year to the present date. Measurements in year to date format play an important role in all sorts of business functions and processes, from financial reporting to financial planning and analysis.

In this article we’ll explore the concept of year to date, and explain the many different ways businesses and finance teams use it to assess their performance.

Year to date definition

What does year to date (YTD) actually mean? Simply put, it’s the time period spanning from the beginning of the year, to the present.

However, depending on context, this can mean one of two different things:

• The beginning of the calendar year (1 January)

• The beginning of the fiscal year (In the UK it is usually 6 April, but it can vary from country to country and company to company)

The diagram below represents the two different ways to calculate year to date metrics:

In this example, the current date is 1 October. As you can see, the time frame for YTD measurements can vary enormously depending on the current date, and the type of YTD calculation you are using.

Why are year to date metrics important?

Measuring business- and performance-related metrics using a year to date time frame has many useful applications.

Key metrics measured on a quarterly or yearly basis provide a retrospective figure for performance over a set time period. This is useful for reviewing past performance during planning. However, these figures are not particularly useful in the present. Likewise, real time metrics only provide a snapshot of current performance and lack wider context needed to draw accurate conclusions over a longer time period.

That’s where year to date metrics come in — they provide an up to date figure across the current year to the current date. Given that YTD is always measured from the beginning of the year, it becomes more valuable the later in the year it is used. This is because you’ll have more data to draw accurate, statistically significant insights. 

Year to date examples and formulas

Year to date metrics are used by many different departments and teams throughout a business. Below we’ll outline a few key examples with formulas and use cases.

Year to date SaaS spend

Being able to calculate cumulative spend throughout the year is important for budget management and variance analysis. One major source of business spend, which is only set to increase as businesses automate and digitise processes, is software costs.

The majority of business software platforms now operate on a software as a service model, thanks to the various benefits it offers customers. The SaaS model means that the customer pays a monthly subscription fee.

The more platforms your business uses, the more you’ll pay. However, while most SaaS fees are static, it’s common to receive introductory discounts, temporary price reductions, or subscription increases when using new features. As a result, YTD SaaS spend can fluctuate significantly, hence the importance of this metric in proper budgeting and cost control.

To calculate year to date SaaS spend, use the following formula:

YTD SaaS spend = ∑ (SaaS expenses from the beginning of the year to the current date)

YTD SaaS spend = ∑ (SaaS expenses from the beginning of the year to the current date)

While this is a simple formula, gathering these figures can be tricky depending on your payment and bookkeeping setup. You’ll need to gather records of your SaaS payments from the start of the year. This can involve a significant amount of work, depending on how and where you store these records, and how many payments you have made.

Tip: Using digital invoices and digital receipts can make the cost calculation process much easier as they are much easier to store and access than paper records.

Year to date cash flow

Cash flow is another key financial KPI that sheds light on the net flow of cash that is entering or leaving a company. It’s important for executive and finance teams to help gain a clearer understanding of a business’s financial health.

Cash flow can vary drastically throughout the year depending on factors like peak sales seasons and large one-off expenses. This is why understanding cash flow at any given time is essential, hence the need for YTD cash flow.

To calculate year to date net cash flow, use the following formula:

YTD net cash flow = Total YTD cash inflow − Total YTD cash outflow

Again, if you’re using manual bookkeeping methods, gathering these records may prove tricky.

Tip: Using a centralised, digital record of all outgoing and incoming cash flow will give you access to an up to date net cash flow figure at all times.

Year to date card spend

Most businesses now use corporate credit cards to pay for business expenses and other business payments. However, discretionary spending in particular often takes place outside of normal budgeting, due to its ad hoc nature. As a result, being able to calculate total card spend across the year is essential for budgeting and business planning.

To calculate year to date card spend, use the following formula:

Year to date card spend = ∑ (Total spend across all company credit cards from start of the year to current date)

Businesses using conventional business cards typically receive a monthly statement summarising spend across all of their cards. This, however, has several drawbacks:

• Delayed insights: Waiting until the end of the month to review spend figures can hinder timely decision-making.

• Limited detail in data: Monthly statements often lack granularity, providing non-itemized, non-categorized data.

• Data utilisation challenges: It can be difficult to efficiently transfer and use raw spend data for analysis.

Tip: switching to smart corporate cards for all of your business payments can provide instant access to real-time spend data. This data is often more detailed, allowing for better tracking and management of expenditure.

Month to date and quarter to date

In addition to year to date metrics, finance teams frequently use month to date (MTD) and quarter to date (QTD) calculations to assess financial performance over shorter time frames. These metrics offer more immediate insights, and can help businesses respond quickly to changing financial and economic situations.

• Month to Date (MTD) focuses on financial activity from the beginning of the current month to the present date. It is particularly useful for tracking short-term changes or seasonal variations in business activity.

• Quarter to Date (QTD) assesses performance from the start of the current quarter. This metric bridges the gap between MTD and YTD, providing a broader perspective than MTD, but more immediacy than YTD.

Like YTD calculations, both MTD and QTD require accurate and timely data collection and analysis. In this sense businesses require modern financial software and digital accounting practices to take full advantage of these calculations.

Get full visibility over your spend with Moss

Moss’ all in one spend management platform gives businesses unrivalled control over their spending. Our customers can automate end-to-end spend workflows to save time and money when processing business expenses and invoices.

We allow you to consolidate expense management, accounts payable, and payments via smart corporate cards in one place, and facilitate quicker month end closing with direct integrations for popular accounting platforms like Xero and DATEV.