Revenue leakage is the money a business earned but never collected. It is the gap between the price you set and the price you got, and in most owner-led businesses nobody is measuring it.

The plain version: work that got done and never got billed, discounts nobody approved, credits nobody questioned, and jobs that cost more than the quote said they would.

It is almost always worth more than a price rise, because it is money the customer already agreed to pay.

The five places it hides

Unapproved discounts. The list price is $100. The invoice says $85. Somewhere between the two, someone on the phone decided $85 was fine. Multiply that by every quote in a year. Discount authority is the corporate term. In practice it means: who in your business is allowed to give money away, and do they know they are doing it.

Credits and rebates. A credit note is a refund with a nicer name. Most businesses process them without a second signature and never add them up. Before Ajility, inside a $5 billion beverage business, I ran a diagnostic across about $10M of processed customer credits. The question was not whether each credit was justified. It was whether anyone had ever looked at the total. Nobody had.

Scope creep on fixed-price work. The quote covered 40 hours. The job took 55. The extra 15 went on the job card and never made it to the invoice. In contracting and services businesses this is the single biggest leak, and it is invisible in the P&L because the revenue line looks right. Only the margin line tells the truth.

Billing lag. Work finished in March, invoiced in May, paid in July. Not leakage in the strict sense, but it costs you the cash for four months and some of those invoices never get sent at all. The test: pull every completed job from the last quarter and find the invoice. There will be gaps.

Price lists that drifted. Costs went up three times in two years. The price list was updated once. The gap is now your margin.

How to find it in a fortnight

Pull 12 months of invoices and sort by customer. For the top 20 customers, line up list price against invoiced price. That is your discount leak.

Pull every credit note for the same period. Add them up. Then sort by who approved them. That is your credit leak.

Pick 30 completed fixed-price jobs at random. Compare quoted hours and materials against actuals. That is your scope leak.

Pull the completed-jobs list from your job management system and match it to invoices. Anything with no invoice is your billing leak.

Four reports, two weeks, and a number at the end. In most businesses at this size the number is between 2% and 5% of revenue. On $10M of revenue that is $200,000 to $500,000 a year, and almost all of it drops straight to profit because the cost of doing the work was already spent.

Why this beats a price rise

A 5% price rise on $10M is $500,000, but you will lose some customers getting it, and you have to hold the line on every quote for a year to bank it.

Closing a 3% leak is $300,000 of work the customer already said yes to. No conversation. No churn. The only change is inside your own business.

Do the leak first. Then do the price rise. They compound.

What stops it coming back

Three rules. A discount above a set percentage needs a second person's approval, in writing. Every credit note over a threshold gets signed off by someone who did not raise it. Every completed job is matched to an invoice before the month closes.

None of this needs software. It needs someone to own it, which is the part most businesses skip.

The next step

Ajility's Pricing and Margin Review starts with the leak analysis above and ends with a price architecture the business can defend. It runs three to six weeks depending on size and schedule, and it is priced on the site.

Read about the service or see the packages page for the price.

Questions founders ask

Common questions

What is revenue leakage?

Money the business earned but never collected: work done and not billed, discounts nobody approved, credits nobody questioned, scope delivered beyond a fixed-price quote, and price lists that never caught up with costs. It is almost always worth more than a price rise because the customer already agreed to pay it.

Are my prices too low, or is the money leaking after the quote?

Test the leak first. Line up list price against invoiced price for your top 20 customers, add up every credit note, compare quoted against actual hours on 30 fixed-price jobs, and match completed jobs to invoices. If the leak is 2 to 5 per cent of revenue, close it before you touch the price list.

Why do my sales reps keep discounting?

Because nothing stops them and nothing makes them feel it. Set a discount authority with a percentage above which a second approval is needed in writing, and pay commission on margin or on revenue at a margin floor so the person giving the discount carries its cost.

How do I set a minimum price or floor for quotes?

Build the floor from fully loaded cost plus the minimum margin the business will accept, put it into the quoting template or tool, and require approval for anything below it. The floor protects the business when quoting under pressure.