The annual true-up process is pivotal for organisations with Microsoft Enterprise Agreements. It is the yearly reconciliation during which you must report any increase in usage of Microsoft products since your last agreement baseline. Managed correctly, a true-up is routine and predictable. Handled poorly, it can result in surprise bills, compliance penalties, or wasted expenditure.
Under a typical Microsoft Enterprise Agreement (EA), you commit to an initial licence count for a set number of users, devices, and products. The true-up is an annual report and purchase in which you declare usage above the original commitment. For example, if you licensed 100 product users but deployed 120 during the year, the true-up is when you purchase licences for those 20 additional users retroactively.
True-ups ensure you pay for what you used and keep your licensing compliant. Most EAs require increases to be reported. You generally cannot reduce licence counts mid-term. Reductions or “true-downs” must wait until agreement renewal.
You must formally report any increases in licences, users, or other metrics covered by the EA, typically 30 days before your agreement anniversary date.
You are billed for incremental licences or subscriptions added during the year. These are typically prorated to align with the agreement term (e.g. an added user licence billed for the remaining months of the year).
The true-up is your opportunity to ensure licensing is in line with actual deployments. It effectively resets your compliance position, aligning licences with current usage going forward.
Failing to execute the true-up properly can have serious consequences. If you do not account for additional usage, you risk being non-compliant, which could lead to penalties in a software audit and back payments for unlicensed use. Conversely, if you overpay or overprovision “just in case,” you waste budget on unused licences. The goal is precision: no shortfall, but no excess spend.
Microsoft true-ups involve many moving parts, and several pitfalls can trip up even experienced IT teams. Here are the five most common mistakes.
The most fundamental mistake is not having an up-to-date inventory of your Microsoft software deployments and user counts. If you are not tracking new installations or user onboarding throughout the year, it is easy to miss something at true-up. This can lead to an unpleasant surprise when an audit finds unlicensed deployments that were never reported. A company deploys several new SQL Server instances for projects but does not update its licence records. At true-up, they under-report and later face a compliance penalty for those instances.
Procrastinating until the true-up deadline to gather data often results in errors or omissions. Rushed reports might overlook deployed software, miscount users, or lack the documentation to substantiate the numbers. A last-minute scramble means you have little time to vet the data or explore cost-saving adjustments.
Many organisations focus on on-premises software but forget that cloud services (Azure VMs, additional Microsoft 365 subscriptions) acquired during the year may also need to be true-upped if they are under the EA. An IT department adds several Azure virtual machines for a new application, assuming Azure’s pay-as-you-go covers it. If those VMs are part of an EA enrolment (such as an Azure plan under EA), they must be reported in the true-up.
Some organisations view the true-up as a one-time annual event rather than a year-round process. Without interim checks, they may discover too late that they have exceeded entitlements or purchased licences they did not deploy (which could have been deferred). This reactive approach leads to either compliance gaps or wasted spend.
A common misconception is that the true-up is an opportunity to remove or reduce licence counts if usage has decreased. In reality, an EA true-up only accounts for increases. If your usage decreased (e.g. you offboarded 50 users), you generally cannot credit or “true-down” those licences until the EA renewal. Organisations that do not understand this may overestimate savings or fail to plan for the fixed costs on unused licences until renewal.
Read Microsoft Licensing Metrics (Cores, Users, Devices) to understand which metrics are tracked in each true-up and how to count them correctly.
Avoiding costly true-up surprises comes down to diligent licence management and proactive planning. Here are eight key practices to ensure your true-ups go smoothly and align with actual needs.
Do not wait for the true-up date to discover what is deployed. Maintain a continuous software asset inventory. Track every new server installation, user addition, or cloud service subscription as it happens. A centralised asset management system or licensing database ensures your true-up report is prepared in advance, with all necessary data readily available.
Treat every quarter (or at least mid-year) as a mini true-up. Reconcile licence entitlements versus actual usage on a regular schedule. Internally auditing your deployments lets you spot discrepancies early: discovering that a development team installed Visio on 10 PCs without licences, or that 30 provisioned Office 365 accounts belong to former employees. Early detection lets you address issues before the official true-up.
Microsoft provides tools such as the Microsoft 365 Admin Centre reports, Azure Cost Management, and the Microsoft Assessment and Planning (MAP) Toolkit. Third-party Software Asset Management (SAM) tools can automate tracking across on-premises and cloud environments, generating reports on user counts, installations, and consumption. Automation reduces human error and is far cheaper than a true-up mistake or compliance fine.
Anticipate how organisational changes affect licensing and budget accordingly. If you know a new project will require 50 SQL Server licences next quarter, or you are acquiring a company with 200 additional employees, start accounting now. Planning prevents “shock” true-up costs. You will have set aside funds and negotiated better pricing for the expected additions.
Maintain open communication with your Microsoft account manager or licensing reseller throughout the year. If you are unsure how a specific deployment is licensed under your EA, ask before deploying. Involve an independent licensing advisor if you have one. They can double-check counts and identify areas of concern. Early communication prevents misunderstandings and ensures no surprises when the true-up is finalised.
Treat the true-up like a project with a timeline. Begin formal data gathering and reconciliation at least one to two months before the report is due. This provides buffer to resolve anomalies. If your inventory shows more usage than expected, you have time to investigate and take corrective action. Starting early ensures accurate and complete submission.
Identify unused or underused licences before submitting your true-up. Perhaps you have 50 Visio users on paper, but only 30 used it in the last 6 months. Reassign those 20 licences to cover new needs instead of purchasing more. Check for dormant cloud subscriptions or installations that can be retired. Re-harvesting licences can significantly cut your true-up bill.
True-ups can be complex in large enterprises with many product deployments. Engaging an independent licensing expert or SAM consultant provides an extra layer of assurance. An expert might notice that SQL Server licences you are planning to true-up could be covered by existing licences with Software Assurance (via Licence Mobility) at no extra cost, or might suggest an EA amendment for a cheaper outcome.
A Microsoft true-up should never be a cause for panic. By treating licensing as a year-round responsibility, tracking usage, staying ahead of changes, and regularly auditing, your annual true-up becomes a straightforward confirmation of what you already know.
An independent Microsoft licensing review before your true-up is the single highest-ROI step. Our Microsoft Optimisation Services cover licence inventory reconciliation, true-up preparation, compliance assessment, and cost-saving recommendations. Most engagements identify savings worth multiples of the advisory investment, turning your true-up from a risk event into a cost optimisation opportunity.
Explore Microsoft Optimisation Services →The true-up is not just a compliance exercise. It is a commercial event that can be optimised with the right preparation and negotiation approach.
The standard EA does not include true-down rights: you can only add licences, not remove them. However, true-down provisions are negotiable at EA signing. The ability to reduce quantities at each anniversary if usage decreases protects you from paying for ghost users indefinitely. This is not standard but is achievable in mid-to-large EA deals. Without it, you pay for the peak user count regardless of actual usage.
True-up costs are prorated based on when the addition occurs during the year. Licences added early in the EA year cost more than those added near the end. If you know you need additional licences but the deployment can wait, timing the addition closer to the anniversary can reduce the prorated cost. Conversely, if Microsoft offers time-limited discounts, weigh the discount against the prorated timing.
If your true-up falls near your EA renewal, use it as leverage. The combination of compliance remediation and renewal commitment gives you stronger negotiating position. Microsoft is more willing to offer discounts on true-up purchases when they are part of a larger renewal discussion than when they are standalone compliance corrections.
Before accepting the true-up quantities at face value, scrutinise every line item. Are all reported users active? Are all SQL Server instances still running? Do all Azure subscriptions need to continue? A thorough review before submission often identifies 5–15% of reported licences that can be eliminated through reclamation, retirement, or reassignment. On a $500K true-up, that is $25K–$75K in avoided spend.
A true-up is an annual reconciliation under a Microsoft Enterprise Agreement where you report any increase in users, devices, or subscriptions since the last anniversary. You pay for the additional quantity at your EA pricing. True-ups occur at each EA anniversary date and you cannot defer them. They ensure your licensing remains compliant with actual deployment.
Under standard EA terms, no. The true-up only accounts for increases. If your usage has decreased, you generally cannot credit or remove those licences until the EA renewal. However, true-down rights are negotiable at EA signing. If your EA includes a true-down provision, you can reduce quantities at each anniversary. If it does not, you pay for the peak count until renewal regardless of actual usage.
The true-up must be submitted at your EA anniversary date, typically 30 days before the anniversary. The exact deadline depends on your specific EA terms. Your Microsoft reseller or account manager will confirm the dates. Starting preparation at least one to two months before the deadline is recommended to ensure accuracy and avoid last-minute errors.
Yes, if they are part of your EA enrolment. Azure consumption under an EA (including Azure plans and commitments) and additional Microsoft 365 subscriptions added during the year must be reported. Many organisations focus on on-premises software and overlook cloud service additions, creating compliance gaps. Review all cloud subscriptions and consumption alongside on-premises deployments.
Under-reporting means you are using Microsoft software without proper licensing, which is a compliance violation. If Microsoft discovers the shortfall during an audit or SAM engagement, you will be required to purchase the missing licences retroactively, potentially at list price rather than your EA rate, plus back-dated support fees. Proactive and accurate reporting is always less expensive than audit remediation.
Several strategies reduce true-up costs: reclaim unused licences before submitting (reassign rather than purchase new), right-size SKUs (E3 instead of E5 where appropriate), retire dormant installations, leverage existing Software Assurance mobility rights, time additions strategically within the year, and negotiate true-down rights at EA signing to avoid paying for departed users. An independent licensing review before the true-up typically identifies savings of 10–25%.
Both have value. Microsoft’s tools (MAP Toolkit, M365 Admin Centre, Azure Cost Management) are free and provide accurate data for Microsoft products. Third-party SAM tools offer broader coverage across multiple vendors and may provide more sophisticated reporting and automation. For organisations with complex, multi-vendor environments, a combination of both typically provides the most complete picture. The important thing is that you are tracking continuously, not just at true-up time.
Whether you need true-up preparation, licence inventory reconciliation, compliance assessment, or EA renewal negotiation, our Microsoft licensing specialists deliver measurable savings as a fully independent advisor.