As organisations navigate increasing business complexity and periods of transformation like never before, they need practical ways to ensure they have the maturity to respond to change and mitigate risks before they manifest into crises. One of the ways they can achieve this is with a sophisticated revenue assurance framework (RAF). RAFs use controls to eliminate ‘leakage’ throughout complex yet critical organisational revenue processes and monitor billing and financial returns to increase confidence in the accuracy and reliability of customer revenue data.
Without a revenue assurance framework, businesses are carrying a higher risk that something will go wrong in their revenue stream. No business is immune to the issues that we list below, so if your current RAF has lapsed, is out-of-date or you simply don’t have one, now is the time to put one in place.
The key risks of a poor revenue assurance framework
1. Revenue leakage
Revenue leakage refers to the preventable loss of revenue for an organisation. It threatens enterprises spanning every industry and is typically caused by a lack of communication across departments, poor auditing processes, insufficient software or weak controls across datasets such as inventory management, tax rules, billing and so forth.
Unfortunately, without a revenue assurance framework, it can be difficult to identify the exact cause of the lost revenue. Was it a typo in a manual data entry, disruption to an upstream ordering system, a missed invoice or payment, or an error in variable pricing and billing terms? If you can’t identify the problem, then it’s near impossible to prevent it occurring again in the future.
2. Inaccurate billing
Inaccurate billing tends to occur when data hasn’t been validated against historical and contractual information, or against other data sources to ensure the accuracy of invoices. With no RAF in place, it makes it difficult to weed out these types of errors and inaccuracies. This can lead to discrepancies within quoted rates or discounts that aren’t applied to monthly invoices, which can spark serial customer complaints. And everyone knows that customer complaints can lead to a tarnished reputation, potentially irreparable brand damage and, of course, further loss of revenue.
3. Negative auditing implications
Organisations – large or small – may be subject to audits at any time, meaning your revenue and financial information always has to be up-to-scratch. However, finding and correcting errors quickly can be challenging without an adequate revenue assurance framework. Mistakes could accumulate for months before they’re identified, creating large, costly problems and increasing the risk that your company could face penalties for non-compliance, such as heavy fines and reputational loss. This also increases the pressure internally to fix these issues quickly when they are identified, which is likely to be difficult without a proper framework to guide the process.
The importance of a revenue assurance framework
A robust revenue assurance framework can give your company early, proactive detection of issues before they turn into big catastrophes. Having a framework to iteratively improve your revenue stream throughout its lifecycle means you can continually optimise it to meet updated requirements and evolving business demands. This gives business leaders confidence that they have the right systems and processes in place to keep revenue coming in a compliant manner.
This is especially useful if your organisation is going through periods of transformation, such as migrating customer data from a legacy system to a modern system with more extensive functionality. With a robust framework in place, you can ensure that data doesn’t fall through the gaps to cause problems to the validity of your revenue.
An effective RAF involves designing and implementing appropriate controls to identify possible revenue leakage or billing accuracy issues. It helps to deploy visual analytics tools like dashboards that provide end-to-end traceability of operational data within a reconciliation process. It’s also critical to empower in-house revenue assurance or risk management teams to maintain the controls, and consult with other teams – like product management and IT – to ensure that potential issues are identified early and the relevant controls for detection are applied from the get-go.
How the data experts can help
Optivia can help your organisation implement an appropriate revenue assurance framework that addresses your specific business needs. With years of experience working with large organisations across the telecommunications, energy and transportation industries, we’ve worked closely with the teams responsible for assessing and enhancing their existing frameworks. Through a risk management approach to identifying gaps, we’ve been instrumental in helping these organisations navigate periods of transformation and respond in an agile manner to change in their respective markets. In fact, across all our large-scale clients, our approach has delivered more than $100M in business value through revenue recovery and remediation of billing accuracy issues.
Through a more mature revenue assurance framework, your organisation can have access to reliable, functional information that drives meaningful decision-making. To learn more about how your organisation can improve control of all aspects of your revenue through a robust and comprehensive RAF, contact the Optivia team today.
At Optivia, we have years of experience in building repeatable revenue assurance frameworks to help businesses maximise their profit. Our data expertise and in-depth business knowledge can help you optimise revenue streams, improve billing accuracy and identify cost-saving opportunities. If you want a clear view of company spend, financial risk and commercial opportunities, contact us today.