Cap It: Five Helpful Tips to Put a Stop to Revenue Leakage

April 10, 2024

Published by: Brian Bruning

That old adage about the tortoise and the hare stands the test of time because its root meaning is so adaptable, especially in business.

Slow and steady wins the race.

Now, what if that wasn’t a good thing?

It’s a lovely afternoon for a bike ride. You pull down your cycle from where it hangs in the garage, strap on your helmet and fill up the water bottle. Do a last check to make sure everything is in order before hopping on to start the ride. A few minutes in, however, and KABLOUIE! the well-worn front tire splits to expose the inner tube which blows instantly. Luckily, it happens early in the ride and outside of missing the rest of that trek, you’re able to address it safely for the next outing. Imagine if, instead, a nail was stuck in the tire, allowing a tiny, imperceptible amount of air to steadily escape until you’re stranded out in the middle of nowhere with a completely flat tire.

The slow and steady leak often is more dangerous than the obvious one.

That’s the way it is with revenue leakage.

Referred to as an unintended loss of revenue for your organization, revenue leakage, when it comes down to it, is either not billing or under-billing your customers for your products or services. The unintended part is key as you either don’t realize this revenue is slipping away until it's too late - or you don’t have the proper tools to do anything about it. 

Some examples of this problem include:

  • The use of spreadsheets and manual processes for essential tracking purposes, resulting in tedious workflow, unnecessary overhead, delays and untrustworthy reporting.
  • Inaccurate travel billing rates, creating a tendency to under-submit resource tracking timesheets.
  • Services personnel involvement in pre-sales activities, which while potentially benefiting long-run implementation goals can often add up to a negative impact on revenue and profitability.
  • Manual billing, which by having to go from system to system is simply asking for trouble in the form of errors, delays and eventual gaps in cash flow.

Consider this example: A customer contract is initiated on the 15th day of the month, yet because the provider’s internal billing system could not accommodate pro-rated invoicing, the provider had to essentially give away 15 days per month. That provider was losing up to $50K per month, $600K annually, because their system could not handle changing a date on an invoice.

Fortunately, RecVue’s billing solution could accommodate pro-rated billing, something our competitors cannot, putting an end to this consistent, costly leak.

You can see why we doubled up on our analogies at the start to get here.

It’s no wonder many experts, including EY, tout the frequently referenced estimate of 1 to 5 percent of a company’s earnings exiting “unnoticed out of companies because they do not have their contract management and payment follow-up processes completely in order.”

Add the continued emergence of this as a corporate concern to impacts from the COVID-19 pandemic and you can understand reports forecasting the global revenue assurance market to more than double its growth to nearly a billion in revenue in five years time.

The revenue assurance market, which registered a revenue of $422.5 million in 2018, is estimated to surpass $948.3 million in revenue by 2026, according to a report by Research Dive.

As the report highlights, “This rise is due to a growing demand for strong validation systems, as well as a growing awareness of the value of revenue assurance systems in detecting revenue leakages among the general public. In addition, the growing trend of incorporating artificial intelligence (AI) into revenue assurance systems is expected to fuel market growth in the coming years.”

It’s clear that however you wish to phrase it, unintended losses, unnoticed earnings exits, or the tiny airhole in your revenue tube, there’s more than considerable interest these days in identifying and resolving them quickly and efficiently.

Which is a fantastic coincidence as we have five helpful tips to prevent revenue leakage:

1. Consider integration of your CRM and ERP systems

By combining your front office and back office disparate systems, you’ll enhance your operation with the power of real-time monitoring and the ability to capture transactional and consumer data. Regardless of the business model being applied - the one-time-sales model or more innovative, hybrid business models of late - integrating these two systems will allow for wider visibility into every account transaction for your business.

2. The time is now to automate those manual processes 

End the scourge of those erroneous and redundant work processes through the use of new technology and automation. In addition to less chance for human error, resources freed up from these financial processes can turn their attention to larger strategic initiatives. 

3. Expand the capacity of your billing system 

Given today’s digital transformation initiatives, the complexity of the business landscape is growing exponentially and your billing system needs to keep up. Consider a system able to create and amend ad-hoc bills, reverse charges and run bill cycles on the spot. Today’s systems must be able to manage hyper-complex contracts in a single seamless process.

4. Build out robust reporting capabilities 

Ensure your company invests properly in cutting-edge business intelligence to allow for the proper level of reporting ability and essential, trustworthy data output.

5. Consider a solution to manage your complex partner payments network 

Partner compensation agreements are often a large source of potential leakage, given the increasing complexity involved in these transactions. Consider a solution that allows for agile management of all revenue share models seamlessly.

Contact us today to learn how RecVue’s billing, revenue and partner compensation platform can help your organization spot - and stop - the leaking toward a future of growth and possibilities.

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