The Biggest Factors Causing Revenue Leakage Today

The Biggest Factors Causing Revenue Leakage Today

Revenue leakage is the gap between actual income and potential income for the same work done. It can occur at any point across your business operations. When it happens in small ways, and not taken as part of a bigger whole, these leaks in revenue don’t seem so bad so they may go unnoticed.

Over 40% of businesses experience revenue leakage between 1% to 9% of their bottom line. That’s one expensive leak.

The most detrimental part of revenue leakage is that most business operators aren’t aware until it’s too late. To minimize the impact of these costly drains, early discovery and process optimizations are essential to keep your budget and cashflow on track.

Let’s take a look at common causes and some tips for how to plug some leaks.

Invoice Processing

Somewhere between services rendered and payment collected, a leak springs and the money a business folds into its cashflow is marginally less than the expected total. Invoicing issues are where the lion’s share of the problems occur.

1. Slow processing time: The longer a payment cycle takes, the more revenue can be lost. The time between work completed and invoice delivery should be as short as possible. The more stopgaps or halts in the process, the more likely it is to lose revenue along the way.
   
2. Fallible data: Delays occur when data is missing, inconsistent, or inaccurate. This results in delays, rework, or refunds. These inaccuracies occur frequently in client billing and payroll particularly, which tend to see the most revenue leakage.

Manual processes anywhere in your payment cycles or payroll processes could be responsible for these mistakes. Inconsistencies or flaws that occur during the data transfer process that result from human error. Upgrade to include more automated processes in your workflow to see revenue where it belongs!

Spearhead, Incyte’s customizable workflow software, was designed to keep costly delays down with guided workflows and to smooth out your payment cycles. From processing to distribution, keep mistakes down and the payments coming in with no questions asked.

Overspending

1. Cost Complications: Price inconsistencies can lead to discrepancies between billing and clients. This can lead to inaccurate billing that causes duplicate invoices, refunds, or credits attributed to their account. All representing lost, valuable income.
2. Faulty Forecasting: Spending on supplies, goods, or even payroll is based on models derived from historic data to predict supply and demand. Overspending for anticipated demand that never shows results in a costly surplus. While underspending for a surprise surge in demand could leave your customers dissatisfied and seeking out competitors.
3. Payroll Problems:Inaccurate time reporting jams up revenue faster than you’d expect. Minute issues such as incorrect employee classification, wage discrepancies, or erroneous overtime payout can mean the difference in thousands of dollars.
   

When your operations are a mess of hard copies, tangled spreadsheets, or mismatched apps, it can be tough to retain revenue. Updating your operations with streamlined systems for optimized spending ensures revenue doesn’t slip between the cracks.

Try a customizable solution like Spearhead, to get all your systems aligned. Developed to prioritize efficiency and visibility, use it to eliminate time and labor costing processes while capturing more revenue than ever.

Plug the Leaks to Keep More Revenue in the Bank

Revenue leaks happen in the least likely places.They could be lurking in siloed departments, inefficient communications, or slow payment cycles. Understand end-to-end operations to see where improvements can be made in processing, timing, or spending.

A Spearhead implementation begins with a thorough analysis of your existing workflow to get a feel for how work progresses through your operations. Once completed, you’re better equipped to pivot and absorb changes without disruptions to your revenue stream.

You’re sure to find lost revenue where you least expect it.