Revenue Intelligence for installation companies

Revenue Intelligence for installation companies is the continuous comparison of the data on your installed equipment, your contracts, the work you carried out and your invoices, so you can see where work was done but not invoiced, where contracts do not match what is actually installed, and where revenue is under pressure over the coming months. It does not replace your ERP, your job sheet system or your planning. It reads them together and puts the differences on a list, with an amount next to each.

Installation companies are particularly exposed to this because they are two businesses in one: a project business that installs systems, and a service business that maintains them for years. Each of the two leaks in its own way, and the handover between them leaks the most.

Two business models, two kinds of leakage

The project business

When installing systems in new build or renovation, you work with a contract sum, a stage payment schedule, variations and provisional sums. The leaks are the same as in construction: variations without an instruction or without an invoice, provisional sums that are not settled, material price increases the contract allows but nobody recharges. Because the installer is often a subcontractor to a main contractor, there is an extra layer: changes run through the main contractor, and what the client accepts from the main contractor as a variation does not always make it through to the installer. How this works in projects generally is covered in revenue leakage in project businesses.

The service business

After handover a different business model begins. Maintenance contracts with a fixed annual price per installation or per site, call-out services with response times, periodic inspections and statutory checks, plus one-off jobs and call-outs charged on a time and materials basis. The revenue is recurring and predictable, and that is exactly what makes it vulnerable: once something is set up wrong, it stays wrong every year.

Common leaks on the service side:

• Maintenance contracts whose price has not been indexed for years.
• Installations that have been extended or replaced, while the contract still covers the old scope.
• Work that falls outside the contract, such as replacement parts or call-outs outside the cover, but is handled as if it were inside it.
• Contracts that have expired while the customer still receives service.
• Job sheets from call-outs and small jobs that never become an invoice.

These patterns are worked out in revenue leakage in installation companies.

The handover

The moment a project turns into service is the moment when most goes wrong. At handover there should be a maintenance contract, covering the right installations, at the right frequency and the right price. Who arranges that differs per company. Sometimes the project manager, sometimes the service department, sometimes sales. In many cases nobody explicitly. The result: installations maintained for years on the basis of a verbal agreement, or never brought under contract at all and only visited when something breaks down.

What data does an installation company already have?

Revenue Intelligence does not start with new data. It starts with the data that already exists but is never put side by side.

Each comparison between two of these sources produces its own type of finding. That is the core of the idea: not one big dashboard, but a series of targeted comparisons.

Which comparisons are worth money?

Asset register against contracts

Which installations are in your register but not covered by any contract? Those are customers you serve on call-outs without a standing agreement, or installations that were never brought under contract at handover. Each one is an opportunity for a maintenance contract.

The other way round: which contracts cover installations that no longer exist or have been replaced? When a boiler has been replaced by a heat pump, the contract is often not updated. Sometimes that means you charge too little for a more complex installation, sometimes that the customer pays for something that is no longer there. The second is not a revenue opportunity, but it is a risk to the relationship that you would rather discover yourself.

Contracts against invoicing

Is every active contract invoiced, at the amount in the contract, at the agreed moment? Has the annual indexation been applied? This is the same check every business with recurring revenue has to do. What is specific to installers is that contracts are often built up per site or per installation, so a customer with twenty locations has twenty contract lines that can each deviate separately.

Job sheets against invoicing

Does every completed job sheet have an invoice line, or an explicit note that the work falls under a contract? This is the most direct finding. Job sheets marked complete in the app but never passed on to invoicing exist in every installation company that runs a separate job sheet system. The only question is how many.

Job sheets against contract cover

A call-out at a customer with a maintenance contract is often treated as contract work by default. But not every contract covers every fault, every part or every time of day. If the contract covers labour but not parts, for example, or call-outs during office hours but not outside them, part of the work still needs to be invoiced. If you do not put job sheets next to the cover, you deliver that work for free.

Material usage against recharges

Material used on a job sheet or project, whether from your own stock or bought in directly, should come back on an invoice unless it falls within a contract or a fixed price. Engineers who use material from the van and leave it off the sheet are a well-known leak that is hard to measure. Comparing stock issued with material invoiced per period shows how large it is.

Contract term against service activity

Which contracts have expired or been cancelled while job sheets are still being raised as contract work for that customer? Which contracts are about to expire without a renewal being prepared? The first is direct leakage, the second a risk to next year's recurring revenue. The general pattern is covered in revenue leakage from expired contracts.

Worked example

Worked example: suppose an installation company with EUR 12 million in revenue, of which EUR 7 million comes from projects and EUR 5 million from service. The company has 900 maintenance contracts and carries out around 11,000 job sheets a year. A first comparison of the sources produces the following:

That is around 1.6 percent of total revenue, and almost 4 percent of service revenue. The project side is not yet included. Most of it is recurring: indexation you apply now pays out again every year.

These figures are an example to show the order of magnitude. There is no reliable industry average for leakage at installers. What it is for you depends on how your contracts are structured, how job sheets reach invoicing and how consistently indexation is applied.

What does Revenue Intelligence do differently from your ERP?

An ERP or industry package could in principle make many of these comparisons. The data is often even in there. So why doesn't it happen?

An ERP is built to process transactions, not to distrust them. It invoices what is flagged as billable. It does not ask why a job sheet was not flagged as billable. It applies indexation when someone sets it up. It does not report that nobody set it up.

Not everything is in the ERP. The job sheet app, the planning, the contract folder, the CRM and the mailbox are often separate systems with a partial integration. The comparison that is worth money sits precisely between the systems.

Reports answer questions you already had. A report on open job sheets shows what you asked for. Revenue Intelligence works the other way round: it looks for differences that should not be there and shows them, even if you did not ask.

So Revenue Intelligence is not a replacement for your ERP or your BI environment. It is a layer on top that reads the systems together. What Revenue Intelligence is in general is covered in what is Revenue Intelligence, and how it differs from your ERP in Revenue Intelligence vs ERP.

What are the signs that revenue is leaking?

You do not need to run an analysis to suspect that something is leaking. These signs are common in installation companies:

1. Service revenue grows more slowly than the installed base. If you hand over more installations every year but contract revenue barely grows with them, new installations are not coming under contract.
2. Engineers say they do a lot "while they're there". A filter they bring along, a setting they adjust, a small part they replace. Each of those is a job sheet line that does not exist.
3. The job sheet backlog in the office keeps growing. Job sheets that wait days or weeks to be processed are partly never processed.
4. Nobody can say offhand when contract prices were last indexed. Then it was probably too long ago.
5. Customers call with questions about their contract that nobody can answer straight away. If the cover is not clear to your own people, it is interpreted generously in practice.

Technical services as a separate model

Some installation companies are moving towards technical services: management and maintenance of building services as the main activity, often with performance contracts, SLAs and multi-site customers. The leakage patterns then shift from variations and job sheets to contract cover, SLA terms, price adjustments when a site changes and the invoicing of work that falls just outside scope. That is worked out in revenue leakage in technical services.

How do you get started, in four steps?

Step 1: map your sources

List every system that says something about installations, contracts, work or invoices. Note who manages it and how you get data out of it. In many installation companies there turn out to be six or seven, one or two of them spreadsheets kept by a single person.

Step 2: do three manual comparisons

Before you automate anything, do three comparisons by hand, on a sample:

1. Job sheets against invoices. Take all completed job sheets from one month. For each sheet, find the invoice line or the contract note. Count what you cannot find.
2. Contracts against invoicing. Take fifty contracts. Compare the invoiced amount with the contract amount and find out when the last indexation took place.
3. Asset register against contracts. Take the installations handed over in the past year. How many of them are under a maintenance contract?

These three comparisons take a few days of work and give you a realistic picture of where the money is.

Step 3: make ownership explicit

Assign an owner to each type of leak. Who makes sure new installations come under contract? Who applies the annual indexation? Who checks that completed job sheets are invoiced within a week? Without an owner, every leak comes back after a one-off clean-up.

Step 4: monitor continuously

Manual checks work, but they get skipped in busy periods. And busy periods are exactly when the most is left lying. Continuous monitoring puts the sources side by side every day or every week and puts new differences on a list straight away. You can do that with an in-house solution built on exports and a data warehouse, or with a platform built for the purpose. RiOS is such a platform: it is in beta, connects to the systems you already use, monitors revenue leakage continuously and is priced per company, not per user. You can see what the modules look like on the system page.

What should you not expect?

Revenue Intelligence does not fix a poor estimate, does not make engineers faster and does not change the margin on a project that was won too cheaply. It finds money you had already earned but did not invoice, and it shows where recurring revenue is under pressure. For many installation companies that is reason enough to take it seriously, but it is not the answer to every margin question.

It also only works if the underlying data is reasonably in order. An asset register that has not been updated for years, or job sheets without a link to a customer, limit what you can compare. That is why the first output of an analysis is often a list of data gaps, and that list is valuable in its own right.

Checklist

Ten questions for your next meeting with service, projects and finance:

1. How many installations were handed over in the past year, and how many of them are now under a maintenance contract?
2. When were contract prices last indexed, and for what share of the contracts?
3. How many completed job sheets have been waiting more than a week for invoicing?
4. What percentage of call-outs at contract customers is booked as contract work, and does that match the cover?
5. How do we compare material issued from stock with material invoiced?
6. Which contracts expired in the past year, and are those customers still receiving service?
7. Which contracts expire in the next six months, and is the renewal prepared?
8. Was the contract updated every time an installation was replaced or extended?
9. How does a variation that runs through a main contractor end up on our invoice?
10. Who owns each of these questions?

Frequently asked questions

Does an installation company need Revenue Intelligence if it has a good ERP?

A good ERP is a precondition, not a substitute. The ERP processes what is in it. Revenue Intelligence looks at what goes wrong between systems and what is not in them. Many leaks sit exactly at the link between the job sheet app, contract management and invoicing.

Where do installers usually leak the most?

For most installation companies, on the service side: contracts that are not indexed, job sheets without an invoice and work outside the cover treated as contract work. The project side leaks too, but control at the final account is usually better organised there.

Which systems do you need to connect?

At a minimum, contract management, job sheets and invoicing. With those three you can make the most important comparisons. The asset register, stock and the CRM then add further comparisons.

How quickly does it pay off?

The first comparison between job sheets and invoices often produces a list of concrete items within a few days. Indexation only pays off at the next invoicing round, but then it does so every year.

Does this make sense for a smaller installation company too?

Yes, but the form differs. A company with a few hundred job sheets a month can do the comparisons perfectly well by hand. With thousands of job sheets and hundreds of contracts, keeping it up consistently without automation becomes unrealistic.