Revenue leakage: What you need to know in order to grow

It sounds like something you may need a doctor or plumber to remedy, but this time it’s your friendly financial service provider. If you’re experiencing a slowing of growth in your business, or simply difficulties with cashflow, the likely culprit is revenue leakage. But what is it, and more importantly, how can it be stopped? Read on to discover the fundamentals of revenue leakage, and what you can do to ensure you’re always on top of your business finances no matter what the week throws at you…

So what’s revenue leakage, anyway?

Put simply, revenue leakage is the unintended, unnoticed or preventable loss of revenue for an organisation. It occurs when a business’ financial records are not properly maintained, and has a huge impact on broader financial decisions for the business as a whole. Cashflow – the heart of every SME’s effective operation – is deeply affected by these losses, and can impact everything from fostering innovation to competitively recruiting the best staff available.

 Some really common leakage points include:

  • Data entry errors
  • Underbilling, time tracking and pricing errors
  • Data synchronisation errors
  • Unenforced policies (i.e. cancellation and returns)
  • Misused or poorly deployed discounts
  • Customer credit card expiry
  • Chargebacks and fraud

How do you identify revenue leakage points in your business?

It’s one thing to know that there’s a potential problem with your business finances. It’s something else entirely to know how to fix these problems. As experts in financial services and management, of course our first recommendation is to seek ongoing professional support to ensure your bookwork and reporting is accurate and up to date. Establishing efficient, effective systems and procedures is the most proactive way to ensure you avoid the biggest opportunities for revenue leakage in your business.

If you’re already experiencing revenue leakage issues, and you’re not sure where to start, it’s time to put your investigator hat on. Using some high-quality accounting software (i.e. Xero or MYOB), you can begin to establish a picture of your business’ current financial situation. You may also begin to identify discrepancies in records that you hadn’t been able to identify without further analysis.

Best ways to prevent revenue leakage

Thankfully, it’s not all bad news. There is a lot that can be done to prevent further losses once you’ve identified the problem area or areas. Diagnosis is key. Then it becomes a process of systematically updating processes and overall business culture to ensure these issues never happen again. Bringing in a team of experienced professionals to help you establish and maintain these boundaries is always a good idea. Our advice? Make sure you’ve done the following:

  1. Digitise and automate your accounting processes – while we know you and your people are trying your best, nothing really compares to the speed and accuracy of software developed specifically for crunching numbers.


  1. Emphasise and enforce company policies and pricing – both with staff and customers. Minor discounts or infractions may be small individually, but can add up over time and cost you money.


  1. Automate renewals and reminders – to ensure you’re neither chasing customers for payments for up-to-date credit card details for recurring payments, select a system that allows you to automate the process and includes reminders for updates to soon-to-expire credit card details.

As always, if you suspect your business is suffering from revenue leakage, we’re here to help. Why not get in touch today to arrange a discovery session? We’ll collaborate with you to conduct a deep dive on your current financial situation and report back on everything we find – including any recommendations for improvements. Call 1300 472 412 to arrange a time that best suits you, and steer your business where you’ve always wanted it to go.

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