Revenue leakages are common across all kinds of businesses. Let it be a brick-and-mortar business or an IT services organization, revenue leakages do exist, and they are a well-recognized problem. Leading consultants and business experts have spoken about revenue leakages. According to EY, organizations lose between 1-5% of EBITDA on account of revenue leakages.  

When we specifically talk about IT services companies, the quantum of revenue leakages is significantly higher. Our own secondary research shows that for IT services organizations, revenue leakages vary between 5% to as high as 15%.  

Recession, layoffs, pay cuts are the words that are very closely associated with the IT services sector today. Just by glancing through the news, one can make out that all is not well. Globally, IT services organizations are feeling the pressure. During such times, one should leave no stone unturned. If you have not done it yet, this the right time to take a stalk of your revenue leakages and put a plug on them. 

Many IT Service companies consider 'Revenue Leakages' as one of the costs of doing business. That they are inevitable, and nothing can be done about them. But it is your own money. Why should you lose it, especially when there are some good tools out there to minimize revenue leakages? 

Before we dig deeper into the topic, let's try understanding revenue leakages better from an IT services point of view.  

 What are revenue leakages?   

Consider a scenario: you have business in hand, say for Rs.1000/- but you are unable to bill fully even after having the resources on-board- say you billed only Rs.900/-. This Rs.100 or 10% of your lost billing is termed as ‘revenue leakage’. In other words, revenue leakages happen every time you have business and people to deliver it but are unable to bill for it.  

Revenue leakages can happen in multiple ways and in quantities that are often considered ‘insignificant’. You know what is even worse? Many times, you will not be even aware that you have revenue leakages until they have happened. In a typical IT organisation, there are a few spots where you can find revenues leaking quietly.  

 Common examples of revenue leakages in IT service organisations:  

Incomplete timesheets data

If plugging revenue leakages is on top of your priority list, timesheets is the place you should start with. For any organisation, having unfilled or client-rejected timesheets is very common. Unfortunately, companies do not have any mechanism in place that tells them the impact of these incomplete timesheets on their billing. Many times, the impact is realised much later when you have already billed much lesser than you should have!  
 

Lack of appropriate buffers

Imagine you have a project going on in full swing and then some members from the project team are on leave and you do not have appropriate buffers to compensate. Result? Your billing goes down and you lose on the revenue. 

Unplanned leaves

If you have multiple people from the same team on leave at the same time and you realize it too late to do any adjustments, you will not be able to bill the client. Such a kind of situation can be easily avoided if the team leader has visibility into leave applications and their impact on the project billing.   

Poor resource tracking

Imagine you had people allocated to a project (perhaps near the end of the month) but not everyone was updated and hence not billed to the client. Failure to account such resources in the invoice is also a contributor to the revenue leakages.   
 

How to avoid revenue leakages?  

If we look at the above factors that contribute to revenue leakages, we realise that they are often known to us and it’s just that we have no visibility into them. We often think that they are too small to give any attention and that’s the common mistake which happens across the board.  Optimizing these small pockets of losses is the secret ingredient of optimum financial performance and a healthy bottom line.  

We don't run out of petrol for our car usually, do we? The car fuel indicator keeps us updated about the situation all the time so that we can refuel on time. What we really need is a similar indicator for all our revenue leakages. That’s what Instazen exactly does.

Let’s see how Instazen can help IT services companies get rid of their revenue leakages.  
  
 What you don’t see, you can’t move! 

Instazen is designed to show CEOs and business leaders what they need to see. Instazen’s dashboard makes revenue leakages visible to the leadership so that they can dig deeper and find out what is causing them. This ensures that a sudden increase in revenue leakages does not go unnoticed and appropriate action is taken well in time. 

Using Instazen, CEOs can track project wise revenue leakages and revenue leakages over the time for every single project.  

 
Drilling down to the cause

Once the concerned person finds out that revenue leakages are higher for a particular month, with Instazen, she can actually drill down to the factors which are resulting in those leakages.

Instazen allows you to see how much of the revenue leakages is contributed by leaves and how much by incomplete timesheets. Not only that, Instazen shows you exactly which timesheets are adding to the revenue leakages and allows you to bulk fill and approve them. 

Lead indicators to prevent revenue leakages

Earlier in this article, we saw how leaves add to the revenue leakages. Instazen’s leaves management module shows you at a glance the leave applications and you can see how they are going to affect the billing. This visibility allows you to propose adjustments to minimise the revenue leakages.  

Why let go what belongs to you in the first place?  

 Revenue leakages hurt badly because they make a dent in your hard-earned revenues. Getting business is becoming difficult every passing day and due to revenue leakages, you end up leaving your hard-earned money on the table. Why? Reach out to us today to put a full stop to your revenue leakages!