When does a business need Revenue Intelligence?

A business needs Revenue Intelligence as soon as revenue passes through several systems before it is invoiced, and nobody can say with certainty any more whether everything sold is also invoiced and paid. In practice that is usually the case for companies from a few million in revenue with recurring contracts, manual handovers between sales and finance, or pricing agreements that change over time. It is too early if all your revenue originates in one system and one person oversees the whole route from quote to payment.

What is the real question?

When do you need Revenue Intelligence? That question is really about something else: at what point has your business become too complex to know by feel whether the revenue is right?

In a small business, the owner knows. They know every customer, see every quote and sign off every invoice. If something is wrong, it stands out. That feel fades gradually. A sales team arrives, a CRM, a separate accounting package, a second site, a subscription model alongside the project work. Each step makes sense. But after a few years a deal passes four people and three systems before it becomes an invoice, and nobody oversees the whole any more.

Revenue Intelligence is the answer to that loss of overview. What it delivers in euros is set out in the overview of what Revenue Intelligence delivers. This article is about the moment.

Seven signs the moment has come

1. Sales and finance quote different revenue figures

At the monthly meeting, sales says EUR 420,000 has been won. Finance says EUR 365,000 has been invoiced. Nobody can explain the difference within five minutes. Sometimes it is timing, sometimes it is definition, sometimes it is a deal that never became an invoice. As long as you cannot explain it line by line, you do not know which of the three it is.

2. Revenue passes through manual handovers

A deal is marked closed-won in the CRM. Someone creates an order in the ERP. Someone else creates an invoice. Every handover is a moment where something can be forgotten, mistyped or misinterpreted. The more handovers, the more chance of leakage. Why that separation between systems is the problem is covered in why silos cause revenue leakage.

3. You have recurring contracts with variable prices

Annual contracts with indexation, tiered prices, usage-based rates, discounts with a set duration. Each of those agreements requires someone to adjust the price at the right moment. If that does not happen, you under-invoice, again every period.

4. Extra work and changes are agreed separately from the contract

At project businesses, installation companies and service providers, extra work is often agreed verbally or by email. The work gets done. Whether it gets invoiced depends on whether someone remembers.

5. Nobody can say within a day what has not yet been invoiced

Ask the question: which won deals from the past three months do not yet have an invoice? If the answer takes a day of digging, or if the answer is "we don't know", you have no view of your leakage.

6. The forecast is structurally off

A forecast that is higher every month than what comes in says something about the pipeline. A forecast that differs from what is invoiced while the deals were in fact won says something about the handover to billing.

7. Customers find errors before you do

A customer calls to say they received one invoice too many, or that they have not had an invoice for months. If customers find your errors, there are also errors they do not report: the ones in their favour.

A longer list of signs is in 10 signs your business is leaving revenue on the table.

When is it still too early?

Not every business needs Revenue Intelligence. It is probably too early if:

• All your revenue originates in one system, for example an online shop that invoices directly.
• One person oversees the full route from quote to payment and has time to check it.
• You have almost only one-off sales at fixed prices, with no running contracts.
• You do not yet have a CRM or a similar source showing what has been sold.

In those situations a good monthly check in a spreadsheet is often enough. The tipping point comes when that check no longer fits into the time you have for it, or when you notice it being skipped.

Why does complexity matter more than size?

Many people think of revenue when they ask this question. From what amount is it worth it? Revenue plays a part, because one percent of leakage at EUR 20M is more money than at EUR 2M. But complexity is a better predictor of whether anything is leaking.

This table is a way of thinking, not a measurement. It shows why a EUR 5M company with project work benefits from Revenue Intelligence sooner than a larger company with a simple model. For smaller companies the form is often different from that for larger ones; see can an SME use Revenue Intelligence.

A test you can run in an afternoon

You do not have to guess. With this test you know within an afternoon whether you have a problem.

1. Choose a period. The previous quarter.
2. Export all won deals from the CRM, with customer, amount and date.
3. Export all invoices from the accounting system for the same period plus one month after, with customer and amount.
4. Match them per customer. Which deals have an invoice, which do not?
5. Count the deals without an invoice and their total value.
6. Pick five contracts with an indexation clause and check whether the current price is right.
7. Pick five projects with extra work and check whether the extra work was invoiced.

If steps 5 to 7 turn up nothing, your process is in order, at least for this quarter. If they do turn something up, you have a first amount and first evidence in a single afternoon.

Worked example: the outcome of the test

Suppose step 5 turns up four deals without an invoice, together EUR 38,000. Two of them turn out to be genuine misses, the other two a duplicate entry in the CRM. Net EUR 19,000 not invoiced. In step 6, two of the five contracts turn out not to have been indexed, together EUR 2,100 a year. In step 7, EUR 4,500 of extra work was not invoiced on one of the five projects. These are example amounts.

That is EUR 25,600 in a sample of one quarter and ten contracts. Do not extrapolate too quickly, a sample is not a measurement. But it does tell you that you have a problem larger than what you can find in one afternoon.

What do you do next?

If the test turns something up, there are three routes.

Check it structurally yourself. Turn the test into a monthly process, with an owner and a fixed day. This works if the number of deals and contracts is limited.

Have a one-off review done. Someone who does this every day goes through all the areas where revenue can leak and puts an amount on every finding. You get an order of priorities and can carry on yourself afterwards.

Set up continuous monitoring. Software that connects your systems and compares them every day. This pays off if you have enough moving parts to produce new discrepancies every month. Whether the amount you find justifies the investment is worked out in how much revenue leakage justifies software.

Frequently asked questions

When does a small business need Revenue Intelligence?

When you have recurring contracts, extra work or variable prices, and the person who creates invoices is not the person who sells. Size alone is not a good yardstick. A EUR 3M company with a lot of project work gets more out of it than a EUR 10M company with a simple online shop.

Isn't a CRM report enough?

A CRM report shows what was sold. It does not show whether that was invoiced and paid. As long as you do not ask that second question, you do not know whether anything is leaking.

How do I know whether the problem is big enough?

Run the test above. If you already find discrepancies in one quarter and a handful of contracts, the problem across the whole year and all contracts is probably larger. If you find nothing, that is information too.

Do I need to get my data in order first?

Not completely. At a minimum you need a way to match customers in your CRM with customers in your billing. Everything else can follow along the way. Waiting until the data is perfect usually means never starting.