5 Signs Your Sales-to-Cash Workflow Has Sprung a Leak

Inefficiency can cost companies 20% to 30% of its revenue every year (IDC). 

Some of those losses can be chalked up to employee time being wasted through bloated, overwrought processes. Others might be deeper-seated signs that you’ve got a revenue leakage issue in your sales-to-cash workflow which, while fixable, can easily go unnoticed. 

When asked about these sorts of issues, ops writer, Lucy Mazalon observed, “The phrase ‘one step forward, two steps back’ comes to mind.  If revenue leakage is an issue, your organization could take one step forward (“closed won” opportunity), but two steps back (ultimately losing revenue).”

Not sure whether or not there’s an issue in your sales-cash workflow? In this post, we’re going to cover five different signals that it might be time to take a look beneath the hood.

1. Frequent billing errors

Half of invoices generated in the US become past due. 61% of late invoice payments are because the invoice wasn’t correct in the first place. The causes of billing or invoicing improperly are wide ranging but the effect is usually the same: lack of confidence in the cash collection schedule. 

If the customer (understandably) does not pay until the discrepancy is fixed, there will likely be a similar delay on the payment side of the equation. Even though payment might eventually be collected, it might not add up to as much cash in a given time frame as had been projected, which can make for a weaker cash position.

What potential causes might be:

In a lot of cases, this issue comes down to having a poor link between the Revenue team activities (contract signed, deal won, etc) and the Billing team acting upon that information. One Place customer was dealing with this exact issue. Their go-to-market strategy revolved around selling enterprise licenses with additional license added-on throughout the year. 

There were countless instances where the customer’s additional license purchases were recorded in one system but did not get passed over properly from the Revenue team to the billing team so they could update the billing schedule. While their booked revenue data looked fantastic when displayed in Salesforce, it was a far different story when the Accounting team went to reconcile cash receipts and noticed big discrepancies.

What you can do:

The struggle this customer had was that nobody could spot the  discrepancy in the cash they were contracted to collect vs. what they were actually collecting. 

The reason this customer purchased Place’s Revenue & Billing product was to automate those handoffs so that there weren’t so many manual points of failure in their process. 

Their team members were no longer required to go into one system, physically look at a contract, and enter its data into another system. Reducing billing errors means integrating and automating your systems where data is handled to manage the handoff without human intervention. 

2. Missed renewal dates and lost revenue

Similar to the cascading effects of invoice errors and the resulting revenue leakage, when teams and systems are misaligned on customer renewal dates and amounts, it can cause a lot of unnecessary chaos.

Should a signature be delayed on a renewal, financial reporting, including profit and loss (P&L) statements can be affected. The Finance team can only recognize revenue according to very specific accounting rules known as GAAP. If a signature is pushed-off a week or into a new month or quarter, it can cause huge implications for billing and cash collection. 

Likewise, customers might refuse to pay their last bill even if they wanted to renew as they might try withholding payment as leverage for negotiating the new contract.

What potential causes might be:

Renewals are a hotbed of controversy for B2B SaaS companies. There are nearly as many ways to handle renewals as there are SaaS companies. There are differences for exactly when the opportunity should be created, whether each contract amendment should have its own opportunity or if it should be grouped within a single record, and the list goes on. This lack of standardization leaves it up to a CS manager or other team members to manually create an opportunity and pull-in the correct information, which is not ideal.

What you can do:

Renewal opportunities are their own process to worry about so we’re not going to spend too much time on this piece. As far as the sales-to-cash workflow is concerned, identifying issues in that process is a great opportunity to standardize what your company believes is the proper way to construct an opportunity record in your CRM. 

That way, instead of a CS manager or team member having to create the opportunity manually, it can be automatically created at a predefined time interval before the contract ends, ideally alerting the proper team member. Standardizing your renewal process has the added benefit of making your pipeline forecast more robust because all renewals are opened at the same time increment after the deal is signed.

For a deeper dive into everything renewal-related, check out our RevOps Guide to Winning More Valuable Renewals.‍‍

3. Poor handoffs between Revenue and Finance/Accounting 

It’s one thing to have a system not integrated and automated to pass information along. It’s another thing entirely if people don’t know where to look, when, and what to do with the information they find. The former is a technology problem. The latter is a process problem. It won’t matter if you have the best technology available for a particular workflow—if your process isn’t dialed in, you’re going to still have problems.

What potential causes might be:

Potential handoff issues usually come down to one of three things: Lack of communication, information silos, or manual processes. When information is not flowing between teams either because of system limitations or poor collaboration, it increases the likelihood that the teams will have miscommunications or misunderstandings due to lack of context. Likewise, manual data entry and reconciliation are time-consuming and error-prone, leading to delays and errors in reporting.

What you can do:

The crucial first step toward tackling handoff issues is to map out the process from start to finish. This map should identify any roadblocks or bottlenecks that can slow down the handoff process. Once identified, integrating and automating handoffs can help streamline the process, reduce errors, and improve accuracy.

It's also critical to reduce the number of information repositories, ensuring that data is stored in a centralized location that both teams can access. This can help reduce the likelihood of miscommunications and ensure that both teams are on the same page.

4. Duplication of manual data entry because of siloed software systems

There’s a rule in manufacturing referred to as the 1/10/100 rule. The concept, in short, is that prevention of incorrect data is cheaper than correcting it and far cheaper than dealing with the ensuing error. Each manual step you have in any process introduces one more chance for a mistake. 

What this looks like:

Contact information for customers is one data point that is often required to be made in multiple different places. This can be made especially difficult if subscription management is in a completely different database from other account information. In those cases, if it changes in one system it needs to change across others, which requires someone to be alerted in the first place.

What potential causes might be:

One Place customer was struggling with a poor connection between their Salesforce instance and Stripe. While they were invoicing out of Stripe, Salesforce was where they stored data related to customer information, contracts, and account information. They also had to maintain two different instances of their price book as they could not sync them between systems. Whenever a particular SKU changed price or was discontinued, it had to be updated in both systems. Otherwise they’d run the risk of discrepancies between the systems.

 What you can do:

There’s little to be done other than identifying those instances and exploring options for reducing data entry as much as possible. One example is to leverage API integrations between systems that allow those, or to use automation software that can set up workflows that update data across systems. This will help reduce errors, inefficiencies, and reduced productivity from entering data in multiple systems.

‍5. Customer data seems to get corrupted across an array of spreadsheets and systems

We’re not telling you anything you don’t know, but as powerful as spreadsheets are as a tool, they’re also inherently insecure. It’s extremely difficult to control who has access to which version, when, or even what the most up to date version is. 

Consolidating multiple different versions by different stakeholders makes these problems even more pronounced. Even with cloud-based applications like Google Sheets, you still only have a limited insight into rolling back changes, it's too hard to control access, and they lack the full extent of the data analysis tools available in Excel.

What potential causes might be:

The more complex the system you’re trying to coordinate by using onlyu spreadsheets, the easier it is for everything to fail with one incorrect cell reference or formula. Something as important as customer billing schedules can be exceedingly complex. 

Ensuring everything is done correctly requires a high attention to detail. Overall, Revenue teams aren’t as focused on the details because their job doesn’t depend on getting accounting data correct, and oftentimes rarely will. A Revenue team’s job is to win business, build relationships, and support customers. Finance teams, on the other hand, have GAAP rules to concern themselves with that clearly outline when revenue can be recognized from a taxation, reporting, and legal perspective. 

What you can do:

The best gameplan is to move away from spreadsheets as much as possible. Avoid manual work, simplify, and get the right solution/technology to start chipping away at the manual work.

Then, for those processes that must remain in spreadsheet format for one reason or another, build a clear culture around how your team handles spreadsheets. The more explicit and clear your process, the less likely it is for an error to occur. It’s hard to eliminate all of them, but reducing this is a huge initiative and needs to be done. 

Fix your sales-to-cash workflow with a single platform

Ultimately, many issues in the sales-to-cash workflow come down to a combination of three things: bad data, insufficient communication, and poor processes. 

Identifying which of these you’re dealing with is like trying to decipher a puzzle, as there are so many moving parts and team members involved in the overall workflow. 

Investing in a platform that centralizes information and automates information workflows can improve efficiency and help reduce revenue leakage.

Think you're experiencing revenue leakage due to an issue in your sales-cash workflow? Book a demo with one of our experts to find out if you have sprung a leak.

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