Chief Financial Officers (CFOs) or Finance Directors (FDs) play a pivotal role at company leadership level, helping to make crucial financial decisions and leading the execution of those decisions.
They also know that accounting – the backbone of measuring business performance – is a black art of sorts, masquerading as a science.
By adopting a Revenue Assurance approach, they can uncover the story behind the data, sharpen their decision-making ability, and drive new growth opportunities for the company.
At this time of year, CFOs and FDs are preparing their regular financial statements and updates for their stakeholders. But how can they add more value without losing sight of the core values of the business?
Could they make the next period’s results better?
There are several traditional areas that get looked at, such as new products or campaigns to be launched,
or costs to be cut, etc., all of which come with some risks attached.
New campaigns and product releases could end up cannibalising already profitable revenue streams,
or potentially triggering price wars with competitors. Cost reductions could result in poorer operational performance, leading to increased volumes of calls to the call centre, increased complaints, not to mention potential regulatory scrutiny. All this takes resources and effort away from running the business.
We are always surprised to learn that that “improving Revenue Assurance capabilities” seldom gets mentioned, although it has proven to be a winning strategy.
So, what is different about Revenue Assurance?
Adopting a Revenue Assurance approach has several tangible benefits, effectively improving the accuracy of supplier invoices and customer bills, which usually results in better cash flow positions and improved financial performance.
Leading consultancy firms suggest that the average leakage in a telco is about 2% of gross revenues. And these are organisations with an established Revenue Assurance function, even a respectable Revenue Assurance system.
However, in the absence of suitable Revenue Assurance capabilities, leakage levels within Telco’s can quickly exceed 5% of their revenues. And let’s not be caught out: as the costs have already been incurred, the money that can be unearthed from Revenue Assurance directly impacts the bottom line. Even a 1% revenue recovery can make a significant difference to overall margins.
OK, so where do we start?
Is it difficult to get started on the Revenue Assurance journey? Not at all. The only difficulty is finding people with the right mindset to take Revenue Assurance forward within the organisation. More than just a good manager or analyst, a good Revenue Assurance operative should be of an enquiring nature, challenging assumptions, and always seeking the truth. When in doubt, asking to see the original (unprocessed) data, and checking that answers given by others are reasonable and independently verifiable. People can be taught how to use tools, but what comes naturally is the right mindset – that spontaneous inquisitiveness that challenges the information provided.
Assigning good people to Revenue Assurance is just the start though. They need the right tools to help them put their skills to best use.
A Usage and Subscription Assurance tool would relieve them of much of the routine data gathering and processing tasks and allow them to focus on what they actually want to be doing – finding lost revenues.
Revenue Assurance is firstly about having the right people on board, about establishing a risk management culture within the organisation, and about creating a structure and processes to support the function.
Secondly, it’s about moving from spreadsheets to tools that will crunch data automatically and that can be expanded simply and painlessly as the function grows. It’s also about making wise decisions about this sort of technology, ie. not paying for over-engineered Revenue Assurance solution capabilities that will not be used for years, if ever.
This combination of people, processes, and tools, ultimately driven from the top down by the CFO or FD, has the potential to quickly recover lost revenue and to unlock tremendous growth potential within the business.
Why not talk to us, and see what we can do to help?