Revenue leakage between CRM and billing

Revenue leakage between CRM and billing arises when a deal that sales marks as won in the CRM reaches invoicing late, incompletely or not at all. The customer is not set up, a product line drops off, the start date slips or an expansion is not passed on. Because the CRM belongs to sales and invoicing belongs to finance, the handover between them belongs to nobody, which is why in many B2B companies this is the largest and most persistent leak point.

Below: why it goes wrong here in particular, what forms it takes, how to find it and how to close it for good. For the wider context, see the complete guide to revenue leakage.

Why here in particular?

The CRM and the billing system are built for different people with different goals.

The CRM is made for sales. The goal is to close deals. A won deal is the end point. Fields that invoicing needs, such as exact product codes, billing address, VAT number, service start date or the split between one-off and recurring, are administration to a salesperson, and they do not help close the next deal.

Billing is made for finance. The goal is to invoice correctly and completely. But finance invoices what it is given. Whatever is not passed on does not exist as far as invoicing is concerned.

In between sits a handover. In many companies that is an email, a form, an export or an integration that carries only some of the fields across. CRM data describes what sales believes was sold; financial data has to describe exactly what the customer owes. Those are not the same thing, and the gap between them is where this leak lives.

What happens when CRM and billing do not match?

Three things happen, and only the first one is noticeable.

1. Revenue disappears. A deal that is not invoiced, or not in full, brings in less than was sold. That is the direct leak.

2. The figures contradict each other. Sales reports revenue from the CRM, finance reports revenue from the accounts. In the management meeting they quote two different numbers. The discussion then becomes about who is right, not about where the difference lies.

3. Decisions are made on the wrong data. Sales commission is calculated on CRM revenue that was never invoiced. The forecast is based on deals missing from invoicing. Customer value is overstated.

The six forms of this leak

1. Deal won, no invoice

The classic. The deal is marked as won, but the customer was never created in invoicing. Often because the email to finance was not sent, was left sitting in an inbox, or because sales assumed finance would pick it up automatically.

2. Product lines different or incomplete

The CRM has five product lines, invoicing has three. Implementation costs or an extra module dropped off when the data was copied across. Or the product codes in the CRM do not match the items in invoicing, and someone picks the item that looks closest.

3. Wrong or delayed start date

According to the deal, the service starts on 1 February. The customer is set up on 20 March, and invoicing starts from April. February and March are never invoiced.

4. Changes after the deal not passed on

The customer expands, renews or changes their plan. Sales updates the CRM or creates a new deal, but invoicing stays on the old situation.

5. Customer in one system, not in the other

Some customers are in invoicing but not in the CRM, for example because finance once created them directly. And the other way round. Those customers fall outside every comparison.

6. Duplicate records

The same customer is in the CRM two or three times. The expansion is recorded on one record, invoicing runs through another. Nobody sees that the expansion was never invoiced. More on this in revenue leakage from data problems.

Worked example

Worked example: suppose a software company with EUR 4 million in revenue closes 120 new deals and 200 expansions a year. A comparison of CRM and billing over the past year shows:

• 4 new deals were never invoiced. Average annual value EUR 12,000. Together EUR 48,000 a year.
• For 9 new deals, the implementation averaging EUR 3,500 was not invoiced. Together EUR 31,500 one-off.
• 15 expansions were not carried through to invoicing. Averaging EUR 150 a month. Together EUR 27,000 a year.
• For 12 deals, invoicing started on average 1.5 months late. Average monthly value EUR 800. Together EUR 14,400 one-off.

Total: EUR 75,000 a year recurring and EUR 45,900 one-off. All figures are assumptions. The mechanism is the point: four kinds of small error in one handover, together more than 1.8 percent of revenue in recurring leakage alone. How to price findings like these is set out in how to calculate revenue leakage.

How to find it

The check itself is straightforward. Carrying it out takes patience, especially when connecting records.

1. Export all won deals from the CRM over the past twelve to fifteen months, with customer, close date, start date, product lines and amounts.
2. Export all invoice lines for the same period plus three months, with customer, invoice date, period, item and amount.
3. Connect customers. On customer account number if it exists in both systems. Otherwise on company registration number, and as a last resort on name, with a manual check.
4. Connect deals to invoice lines. On order number or deal number if invoices carry it. Otherwise on customer, product and period.
5. Flag differences. Deals without an invoice, invoice amount lower than deal amount, product lines without an invoice line, first invoice period later than the start date.
6. Check the other way round. Customers and invoice lines without a matching deal. They point to an incomplete CRM, which makes other checks unreliable.

How to close it for good

A one-off check finds what has gone wrong. To stop it happening again, the handover itself has to change.

Make the handover explicit. A deal can only be marked as won once the fields finance needs are filled in: billing address, start date, product lines with item codes, split between one-off and recurring. Make those fields mandatory in the CRM at the won stage, whether you run HubSpot, Salesforce or Dynamics.

Use one customer key. Make sure the customer account number from the accounting system, whether Exact, AFAS, Xero or NetSuite, is in the CRM, or the other way round. Without a shared key, every comparison remains guesswork.

Let invoices carry the deal reference. If every invoice includes the deal or order number, the check can be done in one step.

Integrate where you can. An integration that automatically creates won deals as drafts in invoicing removes the email and the retyping. See revenue leakage from manual administration for why that matters. Note that an integration also needs checking, because integrations fail silently.

Assign ownership. One person is responsible for CRM and billing matching. Not for the work itself, but for the outcome.

Check continuously. Run the comparison every month, or automatically every night. Then a leak runs for one invoicing cycle at most.

Checklist

• Are the fields finance needs mandatory at the won stage?
• Is there a shared customer key in CRM and billing?
• Do invoices carry a deal or order number?
• Is there a fixed moment when won deals are compared with invoices?
• Is an expansion or change passed on through the same process as a new deal?
• Is there one owner for both systems matching?
• Is sales commission calculated on invoiced revenue or on won revenue?

Frequently asked questions

Why is the gap between CRM and billing so large?

Because the two systems are made for different purposes and the handover between them is often manual. The CRM records what was sold, invoicing records what was passed on. Everything that was not passed on falls in between.

Does an integration between CRM and billing solve the problem?

Largely, but not completely. An integration removes the retyping, but fails silently when fields are missing or filled in wrongly. You still need to check the outcome.

Which side leads, the CRM or billing?

For what was sold: the CRM, provided the deal is complete. For what was invoiced: billing. The check is about the difference between the two, not about which one is right.

How often should I compare CRM and billing?

At least monthly, after every invoice run. Continuously is better: then you see a deal without an invoice within days rather than weeks.