While focusing on the business expansion plans and handling the dynamics of the market, the management of a business often ignores the fact that there is something that is slowly and steadily obliterating its revenues. Revenue Leakage has become a major problem for thousands of businesses that are operating around the globe.
The term Revenue Leakage defines the loss of revenues in a business that goes unnoticed. Although it can be argued that the leaks in business can come from both revenue of the business and expenditure, revenue leakage is a much bigger problem as in most cases they remain unnoticed. These leaks can accumulate over time to have a major impact in a long run.
Now when it comes to the identification of the causes of the Revenue Leakage, there can be multiple factors or causes that could be impacting the organization. This is the place where professional services providers like CIVXDATA can be your partner, Contact us Now or go through our Smart Revenue Cycle Management Solutions article. Click Here.
Following are some of the major causes of Revenue Leakage found in businesses, listed to acquaint you better with the issue…
What Causes Revenue Leakage?
There are a variety of reasons why a Revenue Leakage can occur in an organization, here are a few culprits slowly exhausting your revenues –
Inability To Keep Up with Changing Trends: The accuracy of revenue handling in business is hugely influenced by the changes in technological tools. Being a company focused on growth it gets harder to keep up with the changing trends. Here is where the Smart Revenue Cycle Management Solutions (Link to company’s website) provider company can help you to get rid of the revenue leakage.
Manual Processing and Billing Errors: If the data in your company is being managed manually, there is a high chance of human error as the size of the data to be processed increases with time. Based on a common belief it is estimated that manual processing is the cause of over 15% to 25% of errors in business. Spreadsheets can just help your business in the initial phase, more specialized services in revenue cycle management are needed to be in place for improving the overall efficiency of the system.
Poor Contract Management: Enforcing contract agreements also entails revenue leakage in a long run. Having an effective contract management plan in place can help in controlling revenue leakage to a good extent.
Inefficient Processes: If it takes more resources to acquire new customers then the drainage of revenues is obvious for any business. Further, inefficiencies in processes such as invoicing can also lead to payment delays and add to the revenue leakage of the company.
Fraud: At times the clients or the employees may get involved in practices that lead to revenue leakage for the company. Misappropriation of funds and false claims can be a major category of such type of revenue leakage.
Employees or customers may engage in fraudulent activities that result in the loss of revenue. This can include false claims, embezzlement, and misappropriation of funds.