Are you losing money in your sales process? Is your pipeline leaving money on the table?
Today, we’re looking at pipeline and sales profit leaks.
So where in your pipeline or your sales process could you be losing profit and losing money? We’re going to conduct a mini sales and pipeline audit.
What I want you to do, this is a task and a challenge for everybody to do, get a plain piece of paper and then write down across the top or across the side, depending on which way you like to do process flows, and write down each of the individual ways that cash or profit or sales come into your business. So we’re looking for the sales process, whether it be a shipped order or a sales order, or a phone order or if it comes from a spreadsheet or it comes from Infusionsoft, or maybe it comes from an invoice that’s raised. List every way that a sale is made through your system. And let’s look at each one of these in order.
So, take a shipped item if you’ve got items that are shipped out of your business, right out of your warehouse, how are you tracking them? How are you recording every item shipped and making sure that the right items are being shipped and they’re being billed to the customer at the right cost at the right place, to the right customer and that you’ve got the right quantity? Where might things be missing in that process? Might it be with staff, might stuff be shipped out but it’s not actually recorded anywhere? Have a think about where your sales process could go wrong in items that are being shipped and how you might capture those.
What if you use sales orders? Are these actually all converting to sales? Now, oddly, there’ll be a lot of business out there that go “Well, I’m going to capture 100% of these. Of course, I’m missing none of them.” You may be missing the odd one here or there. So it’s one of these processes which often gets overlooked. But just review and make sure all of your sales orders are actually converting into sales when they’re actualised when they’re agreed because sometimes some of these can slip through the net.
Now, what about if you track yourself on a spreadsheet? Where are they converting into a sale? Could they be left on your spreadsheet but not converted to a sale? Could you have delivered the service or goods but not actually invoice your customer? So how does it go from spreadsheet to invoice to cash being paid. Follow that process through and see if there are any checks or balances that you need to reconcile on your spreadsheet against your accounting system. Where could that process go wrong? And where could you be missing a sale?
And how about email enquiries? Now, you may have multiple email contacts within your business because you may have different sales consultants. They may all manage a different pipeline. Are they fully converting, and have all the ones which are converting being transferred over to a sales invoice promptly? Because the chances are there might be the odd one here that gets missed, and it gets raised as a late invoice. And then of course it delays your payment. It actually understates your sales at the time. So just need to review a process for your emails and make sure that all of your items in your inbox which relate to inquiries are actually being fulfilled, and they’re being tracked. So what we have seen in the past with customers is that the email comes in, perhaps it comes into an employee’s inbox, it gets left there, it gets forgotten about, employee goes on holiday, things like that and it doesn’t get tracked on to an order fufilling system. Or perhaps it comes into an email and it gets filed accidentally. Those kinds of things do happen. So what process do you have in place to stop that?
What about phone inquiries? What process do you have to write down to track to record inquiries or orders placed by phone? Does it go into a system straight away? Does it get written onto the paper on a post-it note? Could it get forgotten? Could it get mislaid could you miss that order? Perhaps the first time you find out that you haven’t fulfilled that order is when the customer calls you and complains that they haven’t received it. So have a think about that process and where in your phone sales process things could go wrong and you might have a profit late now the reality is you might have a CRM system in place where actually your emails or phone calls, they get recorded in your CRM system. We’ve got to make sure that we may we’re maintaining this system and most importantly if we manage items such as subscriptions (sales subscriptions) in our CRM, we need to make sure that we’re capturing all of the cancelled or expired subscriptions. And actually, cancellation is usually easier to detect than an expired, say, an expired credit card.
If a customer cancels, you can move them over to a customer retention process to see if you can get them to rebuy and convert that back to sale again.
When the card expires, that’s a slightly different thing than’s soft close. If you don’t have a process to sweep those up and capture those, then that happens in the background. The customer still has access to your systems or software, your memberships or whatever they are buying from you, but you’re not getting the income now. That’s a lot harder to track because you’re not raising an invoice necessarily for that service. It’s all being done in a separate system outside of your accounting system in your CRM. Now we’ve seen that happen on two or three occasions in the past where clients don’t have that process in place to capture that missing sale. So have a look and see if that profit leak is happening in your business.
Now, what happens if you have a GoCardless or a stripe system in place? Now typically the way we use GoCardless and Stripe is that GoCardless and Stripe are linked to an invoice in Xero or QuickBooks and that creates an invoice that can be paid by direct debit or by card payment. You can create subscriptions from GoCardless and Stripe themselves. So in the same way that subscriptions are handled by themselves, these subscriptions can happen outside of your accounting system.
So you need to have controls and processes in place to pick up cancellations and payment failures to make sure that you’ve got a process in place to renew that contract and renew that subscription.
Perhaps you have another system which we’re using tracking invoices might be some sort of external software. You might be raising invoices and importing them into your accounting software. So how do you check that you’ve got every single invoice from one system into another? When it comes down to credit control because you’ll want all of your invoices recorded in your accounting system. So do you have cross-checks in place? Do you have a way of checking that your source data matches the accounting data? What happens if there are credit notes raised or adjustments? They might be in the accounting system or they might be in the source system. So even after you check that your sales match at the end of the month, what happens if there are retrospective adjustments.
The final one I want to talk about is repeating invoices in Xero. Now Xero can be set to raise repeating invoices. So say you’ve got contracts to renew every month every three months or six months or 12 months. You’ve got the renewal coming up in Xero, but Xero doesn’t tell you that there’s a renewed invoice coming up if it’s coming to draft, so say you might need to review the price or review the contract with the customer. What process do you have in place to be looking for those draft invoices that are sitting there in Xero? So you could do something as simple as set up as a Zapier zap. Where Zapier sends you an email when a new draft invoice is created. The email there tells you that there’s an invoice that’s ready to be reviewed in your drafts in your Xero system.
So have a think about all of the places where you have a customer sale, where your order comes in and where your pipeline of orders is sitting in your system. Look at each of the steps where a gap or a leak might be in that system. Where the process falls down. Where the invoice might not be raised. Where the credit card might not renew. Where there might be a gap between one system another. And where there’s a potential leak in your business.
Now, even if it isn’t an actual leak that you found today when you did this audit, could it happen in the future? And what controls do you have in place?