In today’s highly competitive business landscape, every new customer acquired is a huge win. However, many companies let their hard-earned revenue slip through the cracks.
Outdated financial systems and inefficient, manual processes make it hard for you to see where your revenue is going. This leaky revenue impacts your bottom line and can prevent you from finding the funds to go after new business opportunities. Patching up your leaks in just a few places can help you regain thousands – or millions – of dollars in lost revenue.
Here are five signs that your company is experiencing revenue leakage and what you can do to stop it:
1. You rely on manual time tracking.Manually tracking employee hours is a long and complicated process. As data flows between employees, supervisors and the finance department, it’s easy to miscalculate a number and overspend on payroll.
According to the American Payroll Association (APA), errors made when manually processing time and attendance can add up to 1–7% of your total payroll costs. If your annual payroll spend is $1 million, these mistakes can cost you $80,000 each year.
For example, employees often don’t fill out their timesheets until the end of the pay period. Then, they struggle to remember when they worked and may overestimate their time, which leads to overpayments for hours not worked.
Many employees fail to log their time at all, and someone in finance then needs to chase after them to complete payroll. This causes your financial team a lot of frustration and wasted time that could have been easily avoided with the proper tools.
2. You pay employees when they’re not working.Long lunches … leaving early … arriving late …
The APA found that the average employee steals more four hours than each week. A few minutes here and a few minutes there can wreak havoc on your payroll. Buddy punching alone – clocking in your friends when they’re not at work – costs U.S. employers $148 billion per year.
Employees can manipulate archaic time tracking systems, such as pen and paper. It’s easy for them to pad their hours to make it seem like they were working when they actually came in late or took time off. If their supervisors don’t pay close attention to their timesheets, you’ll end up paying employees for unworked hours.
In addition, distractions such as social media, texting and personal phone calls take hours away from your employees’ productivity. A University of California, Irving study found that it takes office workers 25 minutes to refocus after a distraction. With so many technological distractions, it’s nearly impossible to get anything done.
3. Your employees manually track their expenses.Here’s a familiar situation …
You log all of your expenses from a recent trade show into your accounting software, and just as you finish reconciling these expenses, someone from marketing shows up with a pile of receipts that he found in his suitcase.
More work for you!
As you know, paper-based expenses are difficult to track. Employees must save all of their receipts, log them into a spreadsheet and remember to send them to accounting. It’s easy for them to misplace receipts, forget what they purchased, and over or under-estimate their expenses.
Manually logging expenses also takes valuable time away from their jobs. Should your CEO be running the company or digging around for her lunch receipt?
You also have to monitor employees to make sure that they’re not putting personal expenses on the company credit card or flying first class when you can only afford to send them in coach.
4. You buy technology that doesn’t deliver ROI.People love new, shiny things.
Many departments purchase technology without first figuring out the business driver for it. How will new software help the business achieve its goals? How will it integrate with your existing technologies? Will its maintenance and support costs override its value?
The financial team needs insight into what technologies people are buying and why.
5. Your billing systems are out of whack.Many companies still run their accounting like it’s the 1980s. They mail customers invoices and send vendors paper-based payments, such as cheques and wire transfers.
But these outdated practices hold your business back.
Manually entering invoices and payments into your accounting system leads to errors and lost revenue. A study by the Aberdeen Group found that manual billing has error rates of 12-15%. These errors make it hard to gain a clear view of your finances. Manual processes also slow your billing cycles and eat into 1-5% of each transaction.
Here are some signs that your billing systems are out of whack:
- Customers don’t pay you promptly, as they don’t receive your invoices promptly
- You don’t pay your vendors promptly, as their invoices get lost in piles of paper or mismatched systems
- Waiting for customer payments means that you don’t have enough funds in your bank account to take advantage of new business opportunities
- You bill products or services at the wrong prices, or your sales team offers unauthorized discounts
- You find errors in customer and vendor contracts that can lead to disputes
- You don’t bill customers when their contracts renew
- You spend too much time reconciling payments manually
How to Stop Revenue LeakageInefficient, slow, and error-prone manual processes cause all of the problems mentioned above.
Moving to electronic systems can help you minimize human error and put an end to leaky revenue. Here are three areas you can automate:
Time trackingTimesheet apps make it easy for employees to send you their hours. Instead of logging their hours on a piece of paper or spreadsheet and personally handing it to you, employees can update their timesheets with a swipe on their mobile device. Timesheet software will automatically send employees reminders and sync submissions with your payroll system, so you won’t need to chase after employees to get their hours.
Cloud-based time tracking can also automate your corporate payroll policy, so you can ensure that timesheets are submitted during the correct pay period (e.g. daily, weekly, monthly) and are routed to the right people for approvals.
Timesheet software that integrates with your accounting or payroll system greatly reduces the risk of manual entry errors. It also gives you full visibility into employee-tracked time, as you can easily and securely view this information online.
Expense managementThe Aberdeen Group found that companies that use cloud-based expense management tools spend 83% less on expense processing than companies who do not use these tools.
For example, expense management apps allow employees to instantly log their expenses into their mobile devices when they are on the road. They won’t need to bring piles of receipts back to the office or try to remember how much they spent at a client dinner.
Expense management software can also automatically reconcile expenses with your accounting software. This gives you visibility into how people are spending company money, so you can control and monitor unauthorized expenses.
Accounts payableMoving from paper-based to electronic AP systems is key to bringing your business into the 21st century.
With manual AP, paper invoices sit on employees' desks until they are routed to Accounts Payable. You don’t have visibility into your liabilities until you receive the invoice and enter it into your Enterprise Resource Planning (ERP) system. Relying on paper-based processes often leads to lost, missing, or duplicate invoices – increasing your liabilities with vendors.
Automation with front-end capture, on the other hand, gives you immediate, real-time visibility into the entire AP process. Automation also provides you with audit proofing and better controls. Every action on a document is automatically logged and tracked, so you can run up-to-the-minute reports on transactions to satisfy your compliance obligations.
Look for an AP system that eliminates the risk of errors or missing information. It should organize and synchronize even the most complex vendor payment information – making it accessible from anywhere through a user-friendly vendor portal.
Next StepsBy leveraging Nexonia’s fully integrated management tools such as Nexonia Expenses, Nexonia Timesheets, Nexonia Accounts Payable and Nexonia Purchase Order systems, you can gain visibility into your finances and put an end to revenue leakage. Nexonia gives you the tools you need to streamline your finances, prepare for an audit, and report on the KPIs that matter to your organization.
- bottom line
- financial management software
- manual processing
- mobile apps
- revenue leakage
- time tracking