How much revenue does a B2B company leak on average?

A commonly cited estimate is that B2B companies leak between 1 and 5 percent of their revenue, with higher percentages in smaller companies with a lot of manual work. At EUR 10 million in revenue, that means EUR 100,000 to EUR 500,000 a year. There is no reliable average for your sector or size: the real figure depends on how many handovers, how much price variation and how much recurring revenue your company has. The only way to know is to measure it.

That answer is less satisfying than a hard number. It is, however, honest. Below is what the range means, why it is so wide, and how to produce your own estimate within a few days that tells you more than any average. For the basics of revenue leakage, see the complete guide to revenue leakage.

Why there is no hard average

To calculate a reliable average, you would have to put all deals, contracts and invoices side by side across a large, representative group of companies, using the same definition of what a leak is. That has rarely been done at that scale and with that care, and publications quoting a precise percentage often say little about how it was measured.

On top of that, companies differ too much:

• A wholesaler with fixed price lists and automated order processing has little room for leakage in prices, but plenty in rebates and volume tiers.
• An installation company with a lot of additional work runs a high risk of unbilled hours.
• An MSP with hundreds of customers on monthly per-workstation rates has a risk that grows with every new employee at a customer.
• A SaaS company with fully automated billing is exposed mainly through discounts and plans.

An average across all those companies says little about any one of them. So treat the 1 to 5 percent range as an order of magnitude: it is not a rounding difference, but it is not a quarter of your revenue either.

What determines your percentage

Five factors decide whether you sit at the bottom, the top or outside the range.

1. The number of handovers

Every time information passes from one system or department to another, something can get lost. A company where sales, contract management, planning and invoicing each have their own system has more handovers than one that runs everything in a single package.

2. The complexity of your pricing

A fixed price per product is hard to invoice wrongly. A price that depends on volume tiers, term, indexation, discounts with an end date and rates for additional work is easy to invoice wrongly. The more variables, the greater the chance of an error.

3. The share of recurring revenue

With one-off sales, an error happens once. With recurring revenue, an error repeats every period. A company with many subscriptions or contracts can therefore have a much larger leak with the same error rate.

4. Time to discovery

A leak spotted after a month costs a month. A leak spotted after three years costs three years. Companies without systematic checks often have leaks that have been running for years.

5. The amount of manual work

Retyping, exporting, forwarding emails, maintaining spreadsheets. Every manual step is a chance of a typo or a forgotten action.

How much revenue am I losing without knowing it?

You can make a first estimate without software and without outside help. It takes a few days of work and gives you a figure based on your own data.

Step 1: choose three checks

Choose the three checks most relevant to your business model. For most B2B companies these are:

1. Won deals with no invoice or an invoice that is too low.
2. Contracts with an indexation clause where indexation was not applied.
3. Work or quantities delivered that were not invoiced.

Step 2: take a sample

You do not have to check everything. Take a random sample of twenty to fifty customers or deals per check. Random matters: if you only pick the customers you already suspect, you will overestimate.

Step 3: calculate the amount per finding

For each discrepancy: what should have been invoiced, what was invoiced, and is the difference one-off or recurring?

Step 4: extrapolate with care

Worked example: suppose you have 300 contract customers. In a random sample of 30, you find a missed indexation for 4 customers, together EUR 1,600 a year.

• Share in the sample: 4 out of 30, just over 13 percent.
• Average amount per affected customer: EUR 400 a year.
• Extrapolated to 300 customers: around 40 customers, together around EUR 16,000 a year.

Do the same for the other two checks and add them up. With a small sample the uncertainty is large, so report a range rather than a single figure. The full method is in how to calculate revenue leakage.

Step 5: set it against your revenue

Divide the total by your annual revenue. That gives you your own percentage, based on your own data. It tells you more than any average.

Worked example: what 1 to 5 percent means

To make the range tangible:

Two things to bear in mind with this table. First: this is revenue with no costs attached. There is no purchasing, no hours and no marketing against it, so almost every euro goes to the bottom line. At a net margin of 8 percent, 1 percent revenue leakage already weighs heavily against profit. Second: this is per year. Leaks that are not closed come back next year, often larger.

Why smaller companies often leak more

It sounds counter-intuitive. Large companies have more systems and more complexity. Yet smaller B2B companies often leak relatively more. Three reasons:

• Less control. A large company has a controller, an internal audit function or a revenue operations team. A EUR 5 million company often has one person doing invoicing alongside three other jobs.
• More manual work. Integrations between CRM and accounting are more often manual in smaller companies.
• More bespoke terms. Smaller companies more often make customer-specific arrangements that depart from the standard, and record them less consistently.

Signs that you are at the top of the range

You are probably higher in the range if several of these apply to your company:

• Sales and finance quote different revenue figures for the same month.
• Nobody can say within an hour which customers have an indexation clause.
• Additional work is often agreed verbally or by email.
• Deals in the CRM have no product lines, only a total amount.
• Invoices are created by hand from an email sent by sales.
• Contracts and invoices have never been compared systematically.
• The person who does the invoicing is the only one who knows how it all fits together.

Where these signs come from in your own chain is set out in where revenue leakage comes from.

Frequently asked questions

Is 1 to 5 percent a research finding?

It is a commonly cited estimate, not a research result that applies to every company. Use it as an order of magnitude to decide whether measuring is worth the effort. For your own company, only your own measurement is reliable.

Can revenue leakage be higher than 5 percent?

Yes. In companies with a lot of additional work, many bespoke prices and little control, it can be higher. It can also be lower in companies with standardised pricing and automated invoicing.

How quickly can I make my own estimate?

With a sample of twenty to fifty customers per check and three checks, it takes a few days of work. That gives you a first range based on your own data.

How do other B2B companies know how much they lose?

Usually they do not, until they measure it. The companies that do know have put deals, contracts and invoices side by side at least once, priced every finding, and repeat the check on a fixed rhythm.