Revenue Leakage in Project-Driven Companies >> Are you working for free?

In a professional services firm or any project-driven company for that matter, everyone knows that the difference between profit and loss can hinge on the slightest changes in some very key metrics.

Accurate tracking of billable expenses, efficient capture of hours delivered, timely billing and hourly rates are just a few of the revenue and profitability challenges that our customers deal with daily.  Inefficient systems and processes often handicap these metrics and result in unrealized billable revenue.

Project and Services companies deal with Revenue Leakage

Unfortunately, most companies are never able to recover unbilled revenue.  Even if a project or services contract allows for hours to be billed down the road, or expenses to be filed later, it is unlikely a customer will be happy about it.  Providing a positive customer experience is just as critical as ensuring that all potential revenue is invoiced.

When revenue opportunities are missed in these ways, we refer to it as revenue leakage – money earned but never collected.

How to approach revenue leakage in project-driven companies

According to Ernst & Young, revenue leakage can account for 1 to 5 percent of anticipated EBITDA being lost.  When was the last time someone said “Ya know, if we increased utilization by 2 points it would impact earnings by 3-4 times that”?  How about this one: “Our DSO is completely unacceptable.  We’re averaging 75 days from the delivery of a service to payment.  Our customers are paying on time, but we’re taking 45-60 days to produce a services invoice.  They aren’t unreliable, we are.”

Revenue Leakage Impact of EBITDA Projections

Changing these metrics is usually easier said than done and requires a measured, cooperative approach between senior management, operational leadership, and delivery teams.  The right technology can provide a platform for improvement, but training and guidance provided on a regular cycle is equally as important.

Identify and understand the leaks.

Take this on as an internal project, but don’t get immediately hung up on fixing the most obvious “leaks”.  Be sure to conduct a comprehensive discovery of related processes and systems that might be hampering the collection of billable revenue.  Estimate the total impact and create realistic goals for getting the correct systems and processes in place.

Plug the leaks.

As your project kicks off, remember that often multiple issues are interconnected and can be fixed as part of the same sprint.  If the leaks are a result of outdated or inefficient software, you may find that proven systems like AXIO Professional Services or Progressus come with built-in process guidance to help get things on track.

Don’t get too comfortable.

The job isn’t finished when you’re comfortable with the changes you’ve made.  Inefficient processes tend to develop over time with employee churn or changes elsewhere in the business.  Sometimes contracts or project plans are created that lack governance and become the norm.  You will want to build regular reviews of leading indicators and key metrics that help to alert you when things begin to move in a negative direction.

Be sure you can count on your ERP, PSA and CRM solutions.

Most companies, large and small, depend on a symphony of solutions to run their business.  Managing revenue streams often depends on multiple solutions being utilized by a variety of individuals that need to work together seamlessly to optimize results.  Consultants and field services people, accounting, billing, and sales people all need to communicate and have visibility into client data.

Join us in an upcoming webinar or visit our on-demand video library to find out how SBS Group has developed the processes, systems, and means of automation to tailor Microsoft Dynamics 365 for project and services companies.   If you don’t find what you’re looking for, please feel free to reach out to me directly with any questions about reducing revenue leakage.

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Best regards,

Robbie Morrison
Chief Solution Strategist, SBS Group

About Robbie
Robbie Morrison has spent nearly 20 years helping customers build and deploy elegant technology and business solutions.  From start-ups to enterprise-class organizations worldwide, his knowledge of the Microsoft Dynamics ecosystem and Robbie-2017products helps SBS Group customers maximize ROI on technology investments.

Today, Robbie serves SBS Group customers in his role as Chief Solution Strategist where he provides thought leadership and manages the development of B2B solutions.  Robbie received his MBA from the University of Georgia, Terry College of Business.
https://www.linkedin.com/in/robbiemorrison

What’s New in AX 2012 R3: Warehouse Management and Transportation

The latest version of Microsoft Dynamics AX 2012 includes some expected and unique changes, ranging from the standard horizontal and vertical features to new apps for mobile devices. In addition to the mobile app changes that increase the accuracy of data for employees on the road, there have been some key updates to Warehouse Management that make establishing process flows, planning, scheduling, and tracking the different aspects of the warehouse easier to manage and more streamlined. Although not as substantial as the changes to the other areas, Transportation Management did have a few helpful updates that will make planning and tracking easier.

Mobile

The addition of mobile apps allows those in transportation or on the road to stay on top of their regular duties instead of having to track it on paper or less reliable means.

– Employees can now make entries for time worked on different projects. For those in the field or on the go, this means the time recorded will be more accurate and less guesswork.

– Management can now approve time from the mobile apps. This means that expense reports are more reliable since managers can approve time from anywhere.

– Expenses can be reviewed and reconciled earlier in the process, so that discussions and decisions can use the latest data.

Warehouse Management

Warehouse Management had a number of notable updates.

– Mobile devices (and scanners) can now be used for stocking and retrieval, which optimizes inventory precision.

– User can configure workflows for inbound and outbound goods.

– Orders can be consolidated so that they can be retrieved in clusters from a single point, as well as updating profiles for better tracking and validation of shipping containers.

– Work can be controlled through batch-scheduling or manually.

– Cycle counting has been improved so user can establish the thresholds, ad-hoc and schedule plans, and the cycle locations and number.

– Users can group containers to organize the packing order, as well as create templates to more easily establish a process and work flow.

Transportation Management

While not as substantial or groundbreaking as the other areas, there are a few new features in Transportation Management worth mentioning.

– Planning has been improved so that users can coordinate inbound and outbound shipments, manage shipping routes, and combine shipments.

– Shipping and structuring transportation has been updated to allow users to configure transportation based on different charges, such as custom duties and fuel rates.

– Driver history and logs are easier to review, with check-in and -out history being displayed, as well as any recorded logs.

The latest version of AX 2012 R3 is well worth the time required for the update. There is potential to streamline and standardize a number of important aspect of warehouse management and transportation, as well as giving users a more reliable method of entering time and tracking progress when they are away from the office.

Keeping the Disruptions out of your Supply Chain

Recently, the Business Continuity Institute published the findings of their 5th annual supply chain resilience survey. The goal of this international survey, involving 519 respondents from 71 countries, is to “…consider the origin, causes and consequences of supply chain disruption.” Here are a few fascinating statistics:

–          75% of respondents still do not have full visibility of their supply chain disruption levels. Only 25% coordinate and report to gain an enterprise‐wide view of disruption. This is unchanged from 2012

This statistic is mind-boggling. Supply chain visibility is critical, and while 100% visibility may be difficult to achieve, at a minimum supply chain managers should have full visibility of disruptions and some type of reporting tools to learn from errors. There are so many technological options to aid in manufacturing, distribution, and inventory management.

–          The primary sources of disruption were unplanned IT or telecom outages, with 55% stating they experienced high or some impact from this type of disruption. This was followed by adverse weather (40%) and outsourcer service provision failure (37%)

All three of these issues are out of the control of the supply chain management team. The best way to cope with external issues is to have a well-established Business Continuity Plan and, in the wake of an emergency, a well-tested Disaster Recovery Plan.

–          41% stated that customer complaints were received as a consequence of disruption, an increase from 35% in 2012, bringing it into second place behind loss of productivity (55%) as the primary consequence of supply chain disruption

A disruption, by definition, is the source of a problem, so the fact that a loss of productivity is rated as the highest consequence should come as no surprise. The growth of customer complaints is a worrisome trend.

Every supply chain, like every other operation, will have its unexpected disruptions. SBS Group can help you prevent (or recover quickly from) disruptions. The supply chain is a significant process in any company and can provide immeasurable time and cost benefits with the right strategy in place. Contact us for more information.

Looking Back on Logistic Forecasts for 2013

In January, Blue Horseshoe released its Top Logistics Trends for 2013. After passing the midway point of 2013, a few of these trends have made significant impacts on the transportation and logistics industry, primarily focusing on ERP enhancements, advanced analytics, and supply chain management.

Going into 2013, Blue Horseshoe expected companies “…will look to replace or enhance their current systems with more effective modules or solutions.” The industry was ready for the next cycle of ERP solutions and Microsoft was able to deliver with their 2013 systems, specifically Dynamics NAV 2013.

One of the most utilized new features in NAV 2013 is its advanced charts. This provides valuable analytics that logistics companies are using “…to get insights about their operations, customers, and employees.” With transportation costs consistently rising, companies have to ensure data is providing the best information for transit decision making.

With advanced analytics in play, the supply chain can be optimized for transparency and efficiency. Technology has improved the visibility of the supply chain process “… in order to meet increasing customer demand. With many retailers providing their customers with live inventory, consumers in all areas of business are demanding live visibility to all areas in the corporation.”

All of these trends in logistics and transportation are centered on digital growth. Information is becoming more accessible and providing greater value in logistics and those not utilizing this data will fall behind the pack. Contact SBS Group for all of your ERP software needs, including Microsoft Dynamics NAV, and you can follow us on Twitter and Facebook.

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