The definitive guide to revenue assurance
If your firm is invoicing against a large number of complex contracts, solid revenue assurance processes can help you stay on top of your contractual agreements with clients.
Revenue assurance is relevant to organisations that are handling a complex and varied range of contracts. Straightforward consumer contracts can have an automated billing process but every term in a B2B contract can be unique to a client.
This can make invoicing a laborious process, and no matter how experienced your billing team, these complex contracts are likely to increase the risk of manual error. While clients will be in touch quickly if their invoices are too high, inadvertently under-charging is more likely to go unnoticed. Even small errors can compound over time and lead to significant revenue leakage. Depending on invoicing rules it might not be possible to reclaim lost revenue.
MRI Software’s data suggests that a manual B2B contract and CRM data entry process could have an error rate as high as 20%. So how can revenue assurance processes help you reduce the risk?
What is revenue assurance?
Revenue assurance is the process of ensuring that a company invoices accurately based on the contractual agreements it has with its customers. If a contract’s terms are complex, invoicing errors can cause clients to be under-charged, and even small errors can add up over time, leading to lost revenue known as “revenue leakage”.
By regularly checking for discrepancies between contract wording and billing history, revenue assurance can help prevent revenue leakage and maximise both cashflow and revenue. Revenue assurance can take the form of manual checks by a company’s sales or account management teams, regular audits by dedicated revenue assurance teams, or automated processes carried out by AI software platforms to spot mistakes.
Why is revenue assurance important?
Strong revenue assurance processes prevent revenue leakage by ensuring that customers are invoiced accurately in line with the terms of their contracts. It also ensures that any mistakes are identified quickly. The faster a mistake is identified, the more likely it is that a customer will pay the shortfall rather than disputing the charge.
Being able to address issues promptly when they do crop up not only maximises the likelihood of recovering revenue leakage, it also improves your customer experience and protects your brand’s reputation. While invoicing mistakes are never ideal, it’s far better for your customer experience and brand reputation to identify them quickly than to find yourself in the awkward position informing clients that they owe large amounts because of long-term invoicing problems which aren’t their fault. Building a central contract repository provides an overview of renewals and expiries and allows account managers to be more proactive and attentive with clients, facilitating easy answers to questions regarding contracts and products purchased and therefore better customer experience.
Which companies need revenue assurance departments?
Any company that invoices a large number of customers based off complex contracts could benefit from a dedicated revenue assurance department. Businesses are particularly at risk of revenue leakage if the amount they invoice their clients varies from month to month, or if their contracts include clauses such as minimum spend levels, discount structures, break clauses, or price increases during the contract term.
Business-to-business contracts tend to be most in need of revenue assurance processes, as these tend to be negotiated individually – companies could have hundreds of different contracts, all containing unique clauses. Businesses operating internationally could also have contracts in multiple languages, making it even more challenging for teams to stay on top of.
In the property sector, firms managing commercial leases or multi-use developments with a variety of different contract types tend to benefit most from a dedicated revenue assurance function. However, even those with simpler contract terms could still benefit from regular checks to ensure that invoices are being issued correctly.
What are the challenges of revenue assurance?
Revenue assurance can be a laborious manual process, requiring teams to review contract documents clause-by-clause and compare them against billing data to spot manual errors in invoicing. This is further complicated by the fact that revenue assurance is a time-sensitive process – if mistakes aren’t spotted promptly, contract terms could mean that un-invoiced charges cannot be re-issued, forcing firms to write off the lost revenue.
This painstaking process is often made more difficult if a company does not have a central repository where all their contracts are stored, or if they don’t have good version control. Long-standing clients can go through multiple versions of contracts with details changing at renewal points, and this can further complicate the task of identifying revenue leakage.
How has Artificial Intelligence (AI) changed revenue assurance?
AI technology can streamline and simplify the process of revenue assurance by analysing contract documents and turning them into structured data. AI-based revenue assurance software stores all contract data in a single central repository. It then uses advanced algorithms trained on hundreds of thousands of contracts in 25 languages to read contract clauses in a variety of different structures, and extract clauses into a consistent format, making them significantly easier for your team to review.
With a single source of consistently-structured data to work with, checking contracts against billing data takes significantly less time, and makes the task of identifying discrepancies far easier for your revenue assurance team. The structured data fields automatically link back to the original contract documents, so there’s a full audit trail and full transparency. This method also creates the option to automate the data comparison with the billing data so that the revenue assurance team can focus on discrepancies rather than going through every contract.
Futureproofing your revenue assurance processes
Putting robust revenue assurance processes in place can not only help your business to spot mistakes quickly, but to prevent similar errors in future. Once a discrepancy is spotted, it’s vital to check any contracts with similar clauses to ensure that the same issue isn’t occurring elsewhere, but variances in contract wording or structure can make this a time-consuming process.
AI revenue assurance software’s structured data formats make this easy, however, by spotting different iterations of similar clauses and reformatting them so they’re consistent. This makes it easy to tackle the root causes of revenue leakage by identifying trends in incorrect invoicing, and either providing additional training or making process improvements to prevent them from recurring in future.
Revenue assurance data from AI tools can also be used to inform your broader business strategy. Insights such as the type of discounts being offered to clients could inform commercial structure, and analysis of contractual terms on a broader level could flag up issues with poor contract templates that put your business at risk.
Whether you’re implementing revenue assurance processes for the first time, or refining your existing approach, AI tools like MRI Contract Intelligence can help you to effectively manage complex contracts and minimise revenue leakage. Find out more about our revenue assurance platform today.
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