Revenue Leakage:
Reasons your subscriptions-based business could be losing revenue and how to minimize it

Whether you are an MSP or ISV you are at risk of revenue leakage. Just like little drops of water make the mighty ocean, little ‘drips’ of small losses can make a mammoth gap in your bottom line. This steady drip of small losses is what we call ‘revenue leakage’ and it can equate to hundreds of thousands of dollars in lost revenue.

In the subscription business, revenue leakage is the loss of money due to missed invoicing opportunities – such as under-invoicing or delayed invoicing. Consider any of these scenarios – your customers aren’t being invoiced as per the updated terms of their agreement or changes in license terms haven’t been tracked and billed efficiently or your renewals are not happening on time. If any of these situations sound familiar, you are likely leaking revenue.

Let’s face it, Office 365, Microsoft 365, and Azure Billing and Provisioning can get complex for Microsoft partners. You have to track license changes, deal with prorated accounts, manage discounts, provide product bundling, ensure timely renewals, and so on. Now multiply this across hundreds of your customers and it can be quite challenging to manage the large volumes of transactions that cloud subscriptions generate. The risk enhances when the steady ‘leak’ of small losses accrue over time and compound as your business scales, eventually creating a big gap in your earned revenue. Whether you’re an MSP who transacts in the CSP model or an ISV looking to scale your cloud business, plugging these leaks is crucial to the health of your bottom line.

Let’s understand the causes of revenue leakage from the context of the different systems and processes you use to track and bill Office 365 and Microsoft 365 subscriptions and Azure usage.

When different business systems operate in silos, many customer transactions are missed and revenue leakage is bound to occur.

Subscription billing has many different challenges – multiple purchase streams, different billing dates, multiple services and products, varying discounts and markups, bundling and packaging, etc. Giving these options creates a great customer experience, but also creates a complicated billing system. If critical information about sales, pricing, renewals, upgrades, etc. is not being captured, tracked, and billed accurately for the duration of your customers’ lifecycle, you’re risking revenue falling through the cracks.

Missed renewals are another big contributor to revenue leakage. ISVs for whom renewals can have a significant impact on their bottom line, delays in renewal or missed renewal opportunities can prove to be very costly. Learn how Work 365 can helps cloud businesses in subscription billing automation.

How to increase revenue in your cloud business?

5 quick tips to improve revenue with smarter and
efficient provisioning and subscription management

Here’s a quick checklist for Microsoft Partner to gauge if you’re risking revenue leaks within your company.

You use excel spreadsheets and emails to manually track and reconcile customer subscriptions, provision services, and send out invoices.

Your customer data is fragmented across different tools, software, and spreadsheets, and you don’t have a unified view of your customer data.

Your sales team spends days turning around a quote.

You wait for Microsoft / Provider invoices to invoice your customers.

You spend a lot of time reconciling invoices.

Invoicing and payment collections tend to be delayed.

You track your renewals manually, leading to delayed or missed contract renewals.

The good news is that revenue leakage is preventable. By automating key processes, maintaining a unified view of your customer data, and establishing a single portal for everything from agreements to invoices, revenue leaks can be prevented and hundreds of thousands in lost revenue can be saved.

Automate your full-order lifecycle management to minimize revenue leakage

AUTOMATION = Unified Data & Single System = No Revenue leakage

Automation can play a key role in plugging the leaks in your cloud subscription management business. Having an automated billing system that’s aligned end-to-end from quotes to provisioning to billing, helps build more value in recurring revenue. It also enables you to collect cash fast – a critical need in the subscription business where you need to maximize collections and minimize write-offs.

When it comes to provisioning, it’s not enough to automate it using a third-party SaaS application. If your provisioning system is unable to calculate your customer billing you could be losing between 0.5% to 3% of your revenue! That could amount to a revenue leak of US$150,000, in a company with an annual turnover of US$5M.

Another important point to note is that manual processes make it difficult to keep on top of Microsoft’s dynamic pricing strategies. Managing Office 365, Microsoft 365, and Azure billing can be a challenge unless synced with the Partner Center and Azure portal to reflect the latest changes. As these costs are forward invoiced to customers, MSPs & ISVs who have not set up automated processes find it difficult to keep on top of the pricing changes.

The writing is on the wall – as your customer base grows, manual processes only impair your business efficiency and create several small ‘leaks’ in your bottom line. An automated invoicing system that can manage recurring billing is essential for growing Office 365 and Microsoft 365 Subscriptions and Azure billing at scale. This is where Work 365 can help!

Work 365 is a billing automation and subscription management solution built on Dynamics 365. It is used by MSPs that transact through the CSP model and ISVs to grow their cloud profitability and automate billing, invoicing, and provisioning processes in one place so they can sell more cloud services, plug revenue leaks, and build more value in their recurring revenue.

Are you struggling to track business transactions and gauge symptoms of revenue leakage? Get more insights on how you can avoid falling through the cracks.

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