Revenue Intelligence vs ERP

An ERP is the administrative core of a business: orders, stock, purchasing, invoices and the general ledger. It records what happened financially. Revenue Intelligence reads the ERP and puts it next to the CRM, the contracts and the delivery records, to see whether what was invoiced matches what was sold, agreed and delivered. The ERP executes what is entered into it. Revenue Intelligence checks whether what was entered is complete and correct.

What does an ERP do?

SAP, NetSuite, Microsoft Dynamics, Exact, AFAS and similar systems form the administrative backbone. Depending on how they are set up, they manage:

• sales orders and their processing,
• stock, purchasing and production,
• projects, hours and materials,
• invoicing and accounts receivable,
• the general ledger and financial reporting.

That makes the ERP the source of truth for what happened financially. If it is in the ERP as an invoice, it has been invoiced. If it is not there, it has not. The external auditor checks the annual accounts based on what was booked in the ERP and the accounting records.

What can the ERP not see?

The ERP is only as good as what is entered into it. It knows no agreements that were not put into the system, and it does not know what should have happened.

What sales sold. A deal in the CRM that never arrived in the ERP as an order does not exist for the ERP. There is no alert, no open item, nothing.

What the contract says. A framework agreement with an indexation clause, a volume discount that only applies above a certain volume, a minimum annual purchase. Unless someone has recorded those agreements in the ERP, and keeps them up to date with every change, the ERP invoices whatever price happens to be in it.

What happened on the job. Additional work a service engineer carried out but did not put on the work order. Extra hours a consultant worked but did not log. A customer using more licences than they pay for.

What should be happening. A contract that expires without renewal. A subscription that stopped while the customer is still being supplied. A customer who suddenly orders half as much.

Those are exactly the places where revenue leaks. The ERP made no mistake. It did what it was told. An overview of these leaks, step by step, is in Revenue leakage between contract and invoice.

Revenue Intelligence alongside the ERP

Revenue Intelligence does not replace the ERP and does not post entries. It reads the ERP as one of its sources and puts it next to the rest.

The key shift: the ERP checks whether an entry was processed correctly. Revenue Intelligence checks whether an entry is missing.

Typical findings between the ERP and everything else

Order without an invoice. An order has been delivered but is still set to "to be invoiced" because a field is missing or the order is stuck in a status. After three months nobody looks at it any more. See How do you check sales orders against invoices?.

ERP price differs from the contract. The customer has an agreed rate of EUR 94 an hour. The ERP still holds last year's rate, EUR 89.

No indexation. The contract says: annual adjustment based on a published price index (for example the national consumer price index). No new price was ever entered in the ERP.

Instalments that stop. A project is invoiced in five instalments. After the third, invoicing stops because the project phase was not updated in the ERP.

Credits without a reason. Credit notes created to resolve a complaint, with no clarity about why or whether the amount is right.

Can't you build this into the ERP itself?

Partly. A well-configured ERP can enforce a lot: mandatory fields, approval routes, automatic price adjustments, instalment schedules. That prevents some leaks at the source, and that is valuable.

But three limits remain.

1. The ERP only knows its own data. What sits in the CRM, in contracts, in time tracking or in support, it only sees if that is explicitly connected to it.
2. Rules prevent what you foresee. An ERP rule enforces what someone thought of. A deviation nobody foresaw falls outside it.
3. Exceptions are normal. In B2B, almost every large customer has something non-standard. An ERP that has to know every exception becomes unmanageable.

There is a fourth limit, which often only becomes clear during a migration. Agreements that were neatly set up in an old ERP, such as customer-specific prices or instalment schedules, do not always come across in full when you move to a new package. The new ERP then invoices flawlessly on the basis of incomplete master data. That is why a comparison between contracts and invoices is especially valuable in the year after an ERP migration.

How to make CRM and ERP work together without overloading either is covered in How do you connect CRM to ERP?.

Worked example: where the ERP reports nothing

Worked example: suppose a technical services company with EUR 10M in revenue has 400 service contracts in the ERP. The ERP invoices each one automatically every quarter.

• 60 contracts have an indexation clause. For 25 of them, the price was not adjusted this year. Average annual value EUR 12,000, average indexation 3.5 percent. Missed revenue: 25 times EUR 420, or EUR 10,500.
• 12 contracts have expired and not been renewed, but the customer still calls for breakdowns, which are handled as if under contract. Say EUR 3,000 in uninvoiced hours per customer. That is EUR 36,000.
• 18 customers had extra installations fitted that were not added to the contract. Say EUR 800 a year per customer. That is EUR 14,400.

Together EUR 60,900 a year. The ERP processed every invoice correctly. The problem lies in what was not in it. The figures are made up to show where the ERP is blind.

Checklist: what your ERP does not tell you

• Are all contract terms with a price impact (indexation, volume tiers, minimum volumes, rates for additional work) held as data in the ERP, or only in the PDF?
• Is there a list of orders that have been "to be invoiced" for more than 30 days?
• For every won deal in the CRM, is it checked whether an order was created in the ERP?
• Are expiring contracts flagged before they expire, and afterwards?
• Who looks at credit notes, and is the reason recorded?
• Do you know which customers use or buy more than their contract covers?

The wider comparison of Revenue Intelligence with BI, CRM, CPQ and other software is in Revenue Intelligence vs Business Intelligence. Which source should lead in which situation is covered in Which data source leads for revenue?.

Frequently asked questions

Does Revenue Intelligence replace my ERP?

No. The ERP remains the place where orders, invoices and entries are processed. Revenue Intelligence reads it and compares it with other sources.

My ERP already has reports. Why isn't that enough?

ERP reports show what was booked. Revenue leakage is revenue that was not booked. You only see it by comparing the ERP with what should have happened.

Should Revenue Intelligence write to the ERP?

Preferably not without human approval. Reading is enough to find leaks. A correction, such as a supplementary invoice, should be approved by someone in finance.

Does this work with SAP, NetSuite, Dynamics or Exact?

Revenue Intelligence works with the data an ERP makes available through an integration. Most common ERP systems have an API for this. What exactly is possible depends on the system and how it is set up.