Revenue Leakage - From Installments and Deferred Billings
Revenue leakage from deferred billing and installment payments impact many businesses. Businesses may find that they can increase the average order by allowing a variety of payment options such as spreading payments over time. Flexible terms will appeal to new customers that prefer delaying billing or wish to try the product or service before actually committing to ‘purchase’ it.
Despite the benefits, offering installment payments and deferred billing can quickly become a revenue leakage headache if not managed correctly.
Installment Payments An installment sale allows the buyer to make payments over an extended period of time. The installment sales method of revenue recognition is a conservative method of revenue recognition due to the deferral of gross profit. It applies when risk and rewards of the good are not fully transferred at the point of sale.
Deferred Billing Deferred billing is a sales promotional technique offering a grace period before payments must be made. Deferred billing may also include an interest-free period if a full-payment is made by a certain date. Without proper controls and processes in place, you risk not collecting on money owed to your company.
Leverage Einstein Analytics Foundry52 can help you implement Einstein Analytics to benchmark and help spot trends to assist in understanding the reasons behind payment declines or lost sales. Once you have the logic foundation set, you can use the analytics to make changes to optimize results over time as your business needs shift and change.
Automate Payment Retry Logic Based upon your metric analysis, identify the kind of transactions you want Salesforce Billing or FinancialForce Billing Central to retry for the payment process. Even a slight improvement in successfully retrying the payment can have incredible benefits for your business.
Revenue Recognition Take preventative measures to offset the risk of revenue leakage by hiring Foundry52 for your Salesforce and FinancialForce revenue and billing business processes. Our team of certified professionals can implement and configure your Revenue Recognition needs to reduce the chance of forgetting to recognize the revenue you have earned.