Certinia’s Solutions for Overcoming Revenue Leakage

Businesses are under more pressure than ever to protect their profit margins and operate more efficiently. With economic and political uncertainty, companies must redouble their efforts to ensure streamlined and effective workflows.

One of the most significant but perhaps underreported threats to an organization’s bottom line comes in the form of revenue leakage. Defined as the “unintentional and unnoticed loss of revenue” companies are surprisingly prone to unbilled or underbilled service hours or products. The average professional services organizations see almost a 5% gap between revenue sold and revenue earned, accounting for a major share of an organization’s potential income.

To help companies avoid any unnecessary revenue leakage, Certinia highlighted five potential culprits and how companies should address them.

Manual Processes

All too often, companies rely on outdated manual processes like spreadsheets, email, or even paper for essential workflows. Organizations leave themselves open to manual errors, lost work, and a lack of visibility when manual work is the standard. When companies fail to record billable services, invoices and other payments can easily slip through the cracks.

By and large, companies recognize that doing away with manual processes is an important step they need to take. SAPinsider asked finance teams what most impacts their organization’s approach to financial close and record-to-report process, the pressure to reduce manual and repetitive financial accounting tasks was far and away the top response, as it was cited by 55% of respondents.

Poor Pricing Discipline

Sometimes, sales teams get too much latitude when billing for services, offering discounts that have not been approved or simply mistaking the price point for a service or subscription. Companies need standardized billing solutions that ensure that all services are charged at a standard rate. Not only does this reduce revenue leakage but also standardizes and streamlines operations.

Not Tracking Customer Lifecycles

Throughout the customer lifecycle, companies ideally have their users purchase new products, upgrades, and add-ons as necessary. Organizations should be sure to keep track of where each customer is on their journey so they can be sure to find customers who may want to upgrade or buy new products.

All too often, companies consider one sale sufficient and do not take advantage of the opportunity to sell further products when the time comes. Leading organizations have customer lifecycle tracking solutions automated so they can reach out at the right time.

Lack of automation

Many organizations still have outdated workflows in place that drain important time from sales teams. AI and automation hold the keys to reducing these delays by streamlining operations and accomplishing lengthy, time-consuming manual tasks.

Business processes are only going to grow more difficult and complex if done by hand. Companies need to empower their workers to accomplish more by automating practices like data entry. Automating this process spares finance and accounting professionals from manual data entry work which can be dull and time-consuming, freeing them up to work on tasks that better make use of their skills and experience. It also has the added benefit of reducing any potential manual errors that are introduced throughout the process.

Excessive administrative tasks

All companies have to handle operational service processes like project estimates, scheduling, project status and risk reporting or service revenue forecasting. Though important, these processes can be difficult to account for throughout day-to-day work, but add up over time. If not billed correctly, companies can miss out on significant income, leading to unacceptable revenue leakage.

Companies must find better and more intelligent solutions to accomplish these tasks in a timely manner, as well as tracking the time it takes to accomplish them.

What This Means for SAPinsiders

Automation holds the key to reducing revenue leakage. A large share of revenue leakage comes from outdated manual workflows. Companies are increasingly turning to AI and automation to reduce manual tasks, improve data integrity, and streamline operations. The vast majority of companies (93%) say that automating essential business workflows is either important or very important, yet automation adoption has been uneven. While adoption is growing, results have been mixed, with many organizations still in the early stages of implementation. Though there are competing priorities, finding the right solutions can deliver immediate ROI and bolster a company’s bottom line long-term.

Adopting a growth mindset is the key. Companies cannot rely on the same methods forever, if even much longer. The sooner organizations implement changes, the sooner they can start reaping the benefits. Yet a lack of buy-in, data issues, skills gaps, and many other issues can stand in the way. Companies must build automation-centered business cases to overcome revenue leakage.

Process standardization streamlines operations and reduces inconsistencies. Companies cannot understand where their revenue leakage is coming from if they do not understand their own sales or their client’s buying cycles. Leading organizations have solutions in place that ensure price standardization, as well as ways to track their customer lifecycle. This makes it easier for businesses to make sales to existing customers at the right price, reducing leakage.