How do you check that all revenue is invoiced?

You check that all revenue is invoiced with a completeness check: first you list everything that is billable (won deals, orders, deliveries, hours, work orders, variations, subscription periods and rechargeable costs), then you reconcile each source against invoicing. Every billable item must have either an invoice line or a recorded reason why it is not being invoiced. Whatever is left with no invoice and no reason is revenue you are leaving on the table. The check only works if you start at the source, not at the invoice.

Why you start at the source

Most invoice checks start with the invoice: is the amount right, is the customer right, is the VAT right. That is an accuracy check. It finds errors in invoices that exist. But you cannot check the accuracy of an invoice that was never raised.

A completeness check reverses the direction. You start with what was sold, delivered or carried out, and ask whether there is an invoice for it. That is the only way to find missing invoices. Auditors have understood this distinction for a long time. In the day-to-day running of many B2B companies it is skipped, because accuracy is visible and completeness is not.

This is one of the core checks in how to find revenue leakage in a business, and usually the one that pays off fastest.

Step 1: define what "all revenue" means

Before you can check whether everything has been invoiced, you need to know what "everything" is. That sounds obvious, but in most companies there is no single list of billable events. They are spread across systems.

Build this table for your own company. Which sources exist, which system are they in, and what is the unit that has to be invoiced? Often you will already find a source at this step that is not recorded systematically anywhere, such as additional work agreed over the phone. That is your first finding.

Step 2: reconcile each source against invoicing

For each source, you put the billable items next to the invoice lines for the same period. The question for each item is: is there an invoice line that belongs to it?

Won deals. Every deal marked as won should have an invoice within an agreed period. This is the check between CRM and billing, described in detail in how to check CRM against billing.

Orders and deliveries. Every order line that has been delivered should be invoiced. Watch out for partial deliveries and backorders: the order is only partly invoiced because it was only partly delivered, and the remainder is later forgotten. See how to check sales orders against invoices.

Hours. Count the billable hours per customer or project and compare them with the hours invoiced. Look out for hours booked to internal codes when they belong to a customer, and for hours above a fixed price that should have been invoiced as additional work.

Work orders. Every completed work order should have an invoice line, or a recorded reason why not (warranty, covered by a contract). In many service businesses, work orders are the largest source of uninvoiced work. See also revenue leakage from manual administration.

Subscriptions. For every running contract there should be an invoice for every period. A missing month does not stand out among hundreds of recurring invoices.

Rechargeable costs. Travel, materials and third-party costs that are passed on by agreement. Check that what was bought or claimed on a customer project also appears on that customer's invoice.

Step 3: sequential numbering where possible

The most powerful completeness check is sequential numbering. Every work order, sales order or variation order gets a unique, ascending number. Every month you check that each number either appears on an invoice or has a status explaining why not: cancelled, warranty, included in contract.

The advantage: a missing number stands out immediately. You do not have to search for what is missing, because the gap in the sequence shows it. The drawback: it only works if every billable item really gets a number at the moment it arises. Additional work agreed on site without a job number being created falls outside it.

Step 4: look at work in progress

Work in progress is work that has been carried out but not yet invoiced. It often sits as a single line on the balance sheet, but is rarely examined line by line. Yet it is one of the best places to find missing invoices.

Sort work in progress by age. Work that has been in progress for more than sixty days, without an agreed invoicing moment in the future, deserves investigation. The older the work, the smaller the chance it will still be invoiced. Specific techniques for finding invoices that should have existed are in how to find forgotten invoices.

Step 5: record the reason and the decision

Not everything that has not been invoiced is a leak. Warranty work, agreed goodwill and work included in a fixed price are legitimate. The difference between a leak and a decision is whether the reason has been recorded.

So for each unexplained item, make a choice and record it:

• Invoice it after all. If the work was carried out and the agreement is clear.
• Do not invoice, with a reason. Warranty, goodwill, commercial choice. With the name of whoever decided.
• Change the process. If the same type of item keeps coming back, the problem is in the process, not the item.

Worked example

Worked example: suppose an IT services provider with EUR 4.5 million in revenue runs the check over the past six months. It finds:

• 9 won deals with no invoice, averaging EUR 3,200: EUR 28,800.
• 410 billable hours that were booked but not invoiced, at an average of EUR 95: EUR 38,950.
• 2 customers for whom one month of managed services was not invoiced, EUR 1,800 per month: EUR 3,600.
• Hardware bought for customer projects and not recharged: EUR 6,400.

Together EUR 77,750 over six months, or roughly EUR 155,000 a year if the pattern repeats. After investigation, part of it turns out to be legitimate: 2 of the 9 deals were deliberately cancelled but never marked as lost, and 120 of the hours were internal work on the wrong code. What remains: EUR 59,950 of genuinely uninvoiced revenue in six months. The exact amounts are illustrative. In practice the ratio between what is found and what was really missed is often similar: part of the first findings disappears on closer inspection.

Checklist for your month-end close

• Does every deal won last month have an invoice or a planned invoice date?
• Has every delivered order line been invoiced, including partial deliveries?
• Have all billable hours from last month been invoiced or accounted for as work in progress?
• Does every completed work order have an invoice line or a recorded reason?
• Has the invoice for the past period been sent for every running contract?
• Have rechargeable purchases made it onto the right customer invoice?
• Has work in progress older than sixty days been investigated?

Frequently asked questions

What is the difference between a completeness check and an accuracy check?

An accuracy check looks at whether the invoices that exist are correct. A completeness check looks at whether an invoice exists for everything that is billable. For revenue leakage the completeness check matters more, because a missing invoice does not show up as an error.

How often should I run this check?

Monthly, as part of the month-end close. An annual check finds the same leaks, but much later, and by then some of them can no longer be invoiced.

What if I have no system that records additional work?

Then that is your first improvement. Additional work that is not recorded at the moment it is agreed cannot be fully checked afterwards. A simple form with a job number is enough to bring it into the completeness check.

Can I automate this check?

Yes, largely. Reconciling sources against invoicing is the same work every month and lends itself well to automation. Assessing the exceptions remains work for people.