Rising inflation disrupted supply chains, and the speculations of global economic recession caused the World Bank to call 2022 a ‘Year of Uncertainty’. As per the forecasts, global growth in 2023 is expected to fall to 2.8%, and the road to recovery will be rocky.
In this context, digital pioneers in India must focus on patching up their revenue streams to minimise and cease leakages. As many as 42% of enterprises still feel the challenges of revenue leakages, losing about 1-5% of their EBITA (earnings before interest, taxes, and amortisation).
In response, top financial entrepreneurs and others are employing revenue recovery strategies. Sanjiv Bajaj, Chairman and Managing Director, Bajaj Finserv Ltd., has also outlined how important it is to manage risks to reduce revenue leakages. “The risk review meetings in BFL go on for a full day. We now have over 450 slides and over 2,000 variables. Doing it month after month, you know what to hone in on, but the information is all there. More importantly, this information is available to people so they can take action whenever needed,” he says.
While there are many challenges to maintaining a watertight revenue stream, financial leaders in India can evolve and successfully eradicate these risks. To know how top pioneers in finance can build a stable revenue growth infrastructure, read on.
- Looking for the Fissures: Identifying the Leakages
Sometimes, revenue can leak in the most unexpected ways. Anomalies or acts of god are freak accidents and impossible to control. However, this is not always the case, and there is usually some controllable reason. Sometimes it is as simple as a data entry miss or a synchronisation error.
Other times it is an inaccuracy in forecasting, a lack of sales pipeline visibility, etc. In order to identify the cracks in their revenue stream, top pioneers in the finance sector need to periodically scrutinise their entire sales process.
However, manually finding these leaks is a complex task and can even be impossible for firms with a large customer base. Such companies can run exceptional reports through data mining to determine incorrect or double payments.
Once identified, financial leaders in India and the world must have reliable assessment models in place. They must be able to determine the impact of each of these issues on their EBITA and how quickly these can be fixed.
- Patching Up: Strategies to Foolproof Revenue Streams
Once a company’s management has gone through the data and identified the major issues, it is time to put a plan of action in place. Decision-making must be evidence-based and data-driven. An important component of revenue recovery strategy is to understand why customers leave.
This could be doubly beneficial for companies battling for survival, as acquiring new customers can be quite costly in this phase. Lastly, one of the most important forms of interventions that top pioneers in finance must consider is upskilling.
Training your teams in new ways of managing finances and protecting revenue will help them better respond to downturns. Knowing how to react is key, and sometimes overcorrecting is the wrong reaction.
Lastly, leveraging the latest technology is equally important to manage your finances by following the above mentioned approaches. For instance, automation and other digital technologies can effectively manage your revenue streams and enhance operational capabilities.
- Sealing Cracks in Time: Urgency in Employing Revenue Recovery Response
It is clear that filling in the cracks causing a revenue leak is only possible with a robust revenue recovery strategy. Throwing “solutions” at the wall and hoping they will stick will not work, at least not for the long term.
However, inaction is worse. So, businesses need to decide how and where to allocate their resources in order to stop these leaks. A smart place to start is to address the underlying cause. If it is a branding issue that is causing potential customers to look the other way, it may be time to pull back on advertising and rethink the narrative.
Alternatively, if the online retail model isn’t working as intended, it may be time to revisit the demographic data and cater to another touchpoint. Whatever the cause, by providing specific teams with highly focused tasks and clear key performance indicators (KPIs), financial leaders in India can speed up the process.
India’s Financial leaders must adopt an integrated approach to their recurring revenue lifecycle. This may require them to overhaul it from configuration and billing to customer retention and renewal or put in place an entirely new operating model.
Guided by the right processes and governance, new models can help businesses adapt and evolve through rapidly changing market conditions. After all, only the fittest survive in the eat-or-be-eaten arena of business.
