In today’s world where companies are under immense pressure to highlight the revenues and profits, they are also under constant scrutiny to project actual revenues earned for the services provided. There seems to be a gap which is leading to a major concern among industries to identify the reasons for the companies not getting their due. Statistics say that approximately 5-7% of the revenue is lost due to revenue leakage. Identification of revenue leakages would be a prime focus to attain sound financial performance. Revenue leakage could occur due to misappropriation of funds by the staff, errors in documentation or recording transactions, lack of trained staff and operational issues in control systems. An event which could have an impact on the revenue could hinder the performance and growth of the company. Effective revenue management is necessary to ensure every process is followed, practises are consistent and the revenue is complete, timely and accurate. It becomes very essential for every company to understand where and how they are losing money. The processes need to be streamlined with appropriate controls in all the areas of the revenue cycle. Consolidating and co-relating all revenue related information and constant reconciliation could identify and minimize potential losses and associated risks. Automation of processes and industry best practices like Six Sigma, ISO and CMMI could also prove to be a method by which standardization of activities and processes could be brought about in the organization. Effective communication of risks and flaw in the operations to the management would enable them to make informed decisions. Management of revenue with effective and efficient approaches could pave the way in focusing on new avenues for revenue growth and build competent organizations for a better tomorrow.
Pratibha Sharma
Sr. Assistant Consultant (Finance & Strategy)