Revenue leakage costly

Fleet operators are losing thousands in revenue due to unauthorised discounts, according to data science firm FOYI.

According to the company’s analysis, fleet organisations routinely fail to account for all costs when invoicing and provide excessive discounts, leading to significant revenue leakage. “Revenue leakage from poor pricing is rampant for fleet operators but often goes unnoticed,” says Sidharth Macherla, Principal Data Scientist at FOYI. “Our findings show fleet operators are quite literally gifting away profits through sloppy pricing processes.”

FOYI examines fleet organisations’ pricing data, historic invoices, and discount policies to pinpoint instances where ancillary costs were missed, pricing guidelines weren’t followed, or discounts exceeded authorised levels. Their data-driven insights calculate the total revenue leaked and lost profit opportunity.

Macherla says that between 3-5% of all invoices contain pricing inaccuracies of anywhere between 5-12%, representing a significant impact on the bottom line for Kiwi fleet operators of all sizes. “From companies we’ve analysed, thousands of dollars are falling through the cracks annually from revenue leakage,” says Macherla. “Plugging these pricing leaks is the fastest way for operators to boost profits without increasing sales.”

Common factors contributing to revenue leakage include software applications that facilitate the unauthorised editing of pricing documents, staff assumptions about profitability, and manual auditing processes prone to errors.

According to professional services network Ernst & Young, 1 to 5% of EBITA flows unnoticed out of companies because they do not have their contract management and payment follow-up processes in order.

FOYI recommends a strategic approach to address revenue leakage, including quantifying the extent of leakage, identifying areas of disproportionate impact, engaging stakeholders, and implementing targeted interventions.