Ideas to Plug your Business Revenue Leakage

Do you know on an average a company loses 1% to 2% of its revenue on account of revenue leakage?  Some of the reasons are below:

• No billing for the job done
• Billing less than the job done
• Outside warranty job not billed
• More discounts than authorized
• Bills not accounted
• Unauthorized Credit/Debit Note

Some of the things you can do right now to plug the revenue leakage are:

Client Reimbursements:   Most of the time, expenses are incurred on behalf of the client with a promise to be reimbursed for the same. Unfortunately due to process errors either the reimbursement is not claimed in time or completely missed.  It is recommended to have proper tracking of such expenses.

Invoices Not Raised on Time:   It is obvious but most of the times Invoices are not raised on time.  This affects the entire working capital cycle which results in high interest cost when funds have to be borrowed to meet the shortfall.

It is recommended to have tracker where all the open projects are listed and invoices billed against it are mapped. This can be done by mapping open projects to invoices in billing software or separate excel sheet has to be maintained.

Contracts Not Renewed in Time:   This typically happens when you deal with big companies. If contracts are not renewed and purchase orders are not issued in time. It can severally affect the working capital cycle. Just imagine you have supplied material in the hope that contract will renew on its own and then your customer raises its eyebrow and says “we will only make the payment only when Contract is renewed”. This typically delays the payment by 60 to 90 days.
It is recommended to start initiating the renewal process a month in advance.

Lack of Customer Feedback System:   Today most of the contracts have a milestone payment terms. Payments are generally made when customer approves the work which was carried out.
But to the contrary vendor raises the bill on client assuming that work was done properly and expects client to pay the same on time. However, client will come back and say “This was not done and That was not done”. In the whole process you lose time and incur losses on account of delayed payments.

It is recommended having standardized client feedback form whereby as soon as the work is completed, client approval is taken. This will serve as critical document when client disputes the payment.