Revenue Leakage: How You Can Save Millions of Dollars

Every business suffers from some form of revenue leakage. A company should expect to lose between 1% and 5% of its realized EBITA as a result of leakage, according to EY. So, if you're a $50M - $100M company that translates to losses from $500k - $5M annually.

Meg Shea
Tagged In
3 min read
October 10, 2023

Every business suffers from some form of revenue leakage. A company should expect to lose between 1% and 5% of its realized EBITA as a result of leakage, according to EY. So, if you're a $50M - $100M company that translates to losses from $500k - $5M annually.

If your business is driven by recurring revenue, billing errors compound and revenue leakage becomes a recurring problem.

How can you stop the leakage? 

First, understand your current quote-to-cash process. It’s important to know everything from how your sales organization captures your order/contract details all the way through to your finance team generating an invoice to the end-user or customer. During this discovery, you’ll likely begin to identify inefficiencies, areas where manual intervention is required, and system limitations.  

Zone customers typically uncover these common billing problems that are contributing to their revenue leakage: 

Unbilled Revenue 

  • Failure to bill or undercharge a customer can happen if you’re not able to easily modify an existing contract. You might need to: add  additional licenses, service(s), or users mid-contract term, ,odify the end date, swap a product, manage negotiated ramps, uplifts, or adjustment policies or true-ups for any usage-based overages or burst rates 
  • Incorrect account information being mapped from your CRM to your billing platform 
  • Customers being listed as inactive 

Invoice Errors

  • A misunderstanding or error in the price or rate being billed results in payment delays and increased administrative burdens because invoices will need to be corrected and reissued. This leads to a negative impact on your DSO, cash flow, and customer satisfaction. 

Lost Renewals

  • Your overall customer churn increases when you fail to monitor customers coming up for renewals, resulting in canceled and delayed renewals. 

System Limitation 

  • Adding new products or changing terms and prices is difficult with an overly rigid billing system. These system limitations make it challenging to clearly convey the service period, price, and product description on an invoice.  If you can’t meet your customers’ changing needs you’re losing revenue. 

ZoneBilling can help stop your revenue leakage in a few ways. For starters, the solution offers flexibility in contract amendments. You’re able to modify contract terms, add line items, swap products, extend the contract, or modify the bill to easily within the same subscription record.

In regards to preventing unbilled revenue, ZoneBilling allows you to easily manage adjustments, prorations, uplifts, and price books, which ensures accurate billing and minimizes unbilled revenue. You’re also able to monitor renewal dates and terms, enabling timely engagement with customers to curb lost renewal risk.

With ZoneBilling you can also expect to streamline your billing and invoicing processes. You’re able to automatically calculate and generate invoices, resulting in reduced administrative burdens and invoice errors.

Lastly, ZoneBilling helps you improve your customer experience with the ability to adopt an invoice to meet your customers' needs by easily grouping, splitting, combining, or subtotaling various charges.

Having a comprehensive Subscription Record built within NetSuite streamlines your contract management process, from creation to renewal.  It supports efficient contract amendments and accurate invoicing.

 ZoneBilling is an automated billing system that can help fight against these common revenue leakage problems. Want to save millions? Of course, you do. Contact us today

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