Monday morning board meetings are always a bit of a grind, but this one was different. The revenue numbers were in, and they didn’t look good. An eerie silence engulfed the room. Something was wrong.

The leadership team was grappling to understand where and how the revenue was leaking. The company needed to fix its systems to plug its revenue leakage quickly. 

Does this story sound too familiar? 

Even the best products and sales teams can’t prevent a business from sinking if the company’s hard-earned revenue is slipping through the cracks. On average, a company loses 14.9% of its yearly revenue to revenue leakage. ⚠️

Revenue Leakage can happen due to various reasons, like incorrect invoices, payment failures, faulty revenue recognition, etc. Whatever the cause, it can have a significant impact on revenue growth. A company’s survival is at risk without a strong focus on revenue recovery.

That’s where finance leaders like yourself come in. As the stewards of a company’s financial health, you must reclaim the money that’s rightfully owed. In this read, we’ll explore the road to financial resilience by implementing strategies for revenue recovery. 

Money Down the Drain: Identifying the Causes of Revenue Leakage

Revenue leakage due to billing errors, ineffective subscription renewals, and suboptimal pricing strategies results in missed revenue opportunities and prevents businesses from maximizing their potential earnings, ultimately leaving money on the table. 

Let’s dive deep into some major culprits that make revenue leakage a recurring problem for subscription businesses. 

Business Complexities 

Your revenue management complexities grow as your business scales in different geographies, expanding its customer base. When it comes to billing and collections, you need to watch out for the following:

  • Discounts, coupons, upgrades, and service downgrades or pauses
  • Collecting payments from customers on multiple billing terms, and different geographies
  • Reliable reports to track your revenue engine and churn rates identify cancellation patterns to make your customer stay
  • Tackling involuntary churn due to payment failures

You must face the truth that billing workarounds just won’t cut it. You need a reliable infrastructure that can handle these complexities, track and bill on the one hand, and manage invoice payments, disputes, and collections on the other. Otherwise, you’ll end up losing your intended earnings because of seemingly small mistakes like incorrect invoices, and payment failures.

Non-scalable Legacy Processes

Traditional systems rely on manual entries and human intervention, ultimately leading to heartburn. For example, if your accounting team manages revenue recognition manually and fails to recognize revenue on time. This can result in serious consequences, such as financial restatements, inaccurate valuation, loss of investor and customer confidence, and hefty fines. 

With the complexity of subscription-based revenue models, managing accurate revenue reporting and being ASC 606 / IFRS 15 compliant manually becomes increasingly tricky. The case of Synchronoss Technologies Inc., which was charged by the SEC for improper accounting of revenues from 2013 through 2017, resulting in a $12.5 million civil penalty, highlights the importance of accurate revenue recognition to prevent revenue leakage and the legal and financial consequences of getting it wrong.


The leak that could ultimately drown your ship is the mindset. You must keep the spirit of experimentation alive, challenge assumptions and prioritize low-cost, high-impact experiments. Automating your mundane tasks allows you to focus on experimentation and maximize revenue without losing out on opportunities.  For example, an outdated or poorly designed pricing strategy can leave customers unsure of the value of your product or service leading to revenue loss.But, if you focus on evaluating your current pricing model against industry benchmarks, testing tiered or usage-based pricing, and gathering customer feedback to better understand your product’s perceived value, you can optimize your product/ service for maximum revenue. 

Remember, even small bets can lead to significant initiatives. Superfoods, a natural, plant-based product company, observed 4x revenue growth in 12 months by continuously iterating its pricing strategy with the help of Chargebee. 

Sealing the Cracks: Strategies for Revenue Recovery

Here are a few tactical measures that can help you plug the revenue holes, making your revenue management truly adaptive:

Keep customers at the very center of your Revenue Management 

For effective revenue management, it’s essential to recognize that every customer is different and manages their payments uniquely. By analyzing customer data and insights, you can develop customized payment recovery plans that cater to the specific requirements of each customer segment. 

If you rely on automated retries and generic dunning emails to recover CoF (Card on File) payment failure payments, chances are it’ll start a domino effect of bad customer experience resulting in a canceled subscription of your most loyal customers.

Alternatively, if you’re able to communicate with your customer:

  • Why the payment failed
  • If it was from your end, state the reason with a quick apology and assure them of a resolution 
  • If it was from the customer’s end, suggest what they can do to prevent it
  • Embed the follow-up communication with payment links to make the payment again

You’ll have better chances of getting that money in your bank, winning extra points for a smooth customer experience. With Chargebee Receivables, you can proactively tackle payment failures and late payments to prevent revenue leakage and cash flow issues by: 

(1) Uncovering the Reason behind Failed Payments

(2) Segmenting Customers Based on Failed Payments Errors

(3) Setting up Retries and Auto-Engagement Workflows

Measure the right metrics, at the right time

Edwards Deming’s famous quote, “In God we trust, all others must bring data.” underscores the need for data and evidence-based decision-making in business. Even after significant technological advancements, According to a 2023 Deloitte survey of tech CFOs, 70% cited inadequate technologies or systems as a challenge to driving data insights. 

To implement smart revenue recovery, understanding why customers churn is crucial to revenue recovery, especially in times of survival mode where acquiring new customers is costly. Implementing a churn deflection funnel with intelligent cancel experiences can help identify why customers leave and offer solutions to retain them. With Chargebee Retention, businesses can analyze the impact of their retention experiments and improve retention performance by learning from offer-cancel reason combinations.

Upskill your team 

For a finance leader, this is the most significant intervention area. To lead sustainable growth, you must encourage upskilling and arm your teams with newer ways of managing finances with automated solutions and a robust tech stack. Moreover, focus on flawless execution by providing playbooks and guidelines to your revenue teams – especially the client-facing ones. For example, providing a direct path to collectors and the operations teams to help manage delayed payments and payment failures can plug the leakages effectively. 

Embrace the latest technology

You can deliver all of the above through technology – automation, automation, and automation. As automation technologies mature and their benefits become more apparent, finance leaders need to recognize the operational efficiency that digital transformation brings. According to McKinsey, 96% of the processes in the revenue cycles can be automated to a significant degree.

Let’s look at an example of a thriving tax preparation software company, Drake Software. They faced a significant hurdle when a private equity firm invested a majority stake in the business. The company’s finance team, led by CFO Jennifer Dills, suddenly had to transition from a cash-based accounting model to the Generally Accepted Accounting Principles (GAAP) framework, recognizing revenue on an accrual basis.

The transition was challenging. The finance team needed to ensure the company was GAAP compliant, and they needed to do it fast. Failure to do so would have put the company in a difficult situation.

That’s when they turned to Chargebee RevRec. The revenue recognition software allowed Drake Software to automate its processes, saving over $150,000 annually in operating costs. The software’s capabilities also helped streamline Drake’s complex revenue streams, making yearly audits faster and more efficient.

With Chargebee RevRec, Drake Software successfully transitioned to GAAP compliance and continued serving their 70,000+ customers, processing over 33 million tax returns annually.

A stitch in time

As Warren Buffet says, “Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.” 

I wish there were a single silver-bullet solution to this. However, finance leaders need to focus on building a revenue growth infrastructure that empowers businesses to rapidly change, evolve, and adapt to changing market conditions while driving a great customer experience at every step. 

While adopting a revenue command center for your business, you need to ask yourself: 

Is your collection team empowered with all the insights they need to recover a failed payment and curb involuntary churn? Do you get a real-time view of the payment status of all the online and offline invoices? Can you implement a retention workflow to make your customers stay? Can you run pricing experiments like usage-based billing with your current billing software? 

You need an integrated approach to the entire recurring revenue lifecycle — from setup and configuration to billing and invoicing, all the way to collections, customer retention, and renewal.

Keep an open mind to adopt a revenue growth management solution that is niche enough to be impactful while being broad and futuristic enough to grow with your needs.