Unbilled revenue, or revenue that has been earned but not yet invoiced, can pose a significant challenge for businesses.

Delays in billed revenue and advance payments can lead to cash flow issues, errors in the balance sheet, financial statement inconsistencies, and missed revenue opportunities.

CPQ helps businesses address these challenges by streamlining the entire process from configuration to billing, helping to improve accounting standards and consistency.

We’ll examine how CPQ can minimize unbilled revenue, enhance billing accuracy for receivables, create more predictable cash flow and increase accrued revenue, especially within the context of SaaS businesses.

What is unbilled revenue?

Did you know unbilled revenue can harm your bottom line?

Let’s say you’re running a company. Business is going well.

Sales are flying and people are moving, perhaps a little too quickly, to keep up with it all. Maybe you’re short staffed or people are being careless and rushing, maybe both.

This leads to an increased risk in delayed invoices, quotes being incorrect, or complex configurations causing errors and missed revenue and an imbalance in accounts receivable.

Missed revenue equals missed money, which can ultimately hurt your business. By the time you catch it, it could be a very long process to recover from.

Maintaining a consistent cash flow and accurate invoices needs to be a top priority, and there are tools like CPQ that can help you manage this easily.

Automating the quote-to-invoice process with CPQ

Eliminate manual errors and speed up the transition from quote to invoice.

What if there was a software that made sure your quotes are accurate, pricing is consistent, and invoices are generated efficiently? Imagine, no unbilled accounts, and accurate project milestones, even for unearned revenue!

CPQ, configure, price, quote, is a tool that automates this process, reduces manual errors, shortens billing cycles, and ensures that all billable items are captured in a timely manner — minimizing the occurrence of unbilled revenue.

How do you track and account for unbilled revenue? Start by looking through all revenue, whether projects are completed or not, in addition to advanced payments.

Next break these down by category. Once you have this sorted, invoice the customers and track those invoices closely until they’re fulfilled.

Client success spotlight

With the implementation of PandaDoc CPQ for HubSpot, HAAS Alert has not only saved an impressive 120 hours each month but has also significantly reduced errors in their quoting process.

This newfound efficiency has allowed the sales team to focus more on closing deals, enhancing customer interactions and improving their overall sales performance.

What is unbilled revenue in SaaS?

Revenue that hasn’t been billed can particularly affect SaaS. This can happen in SaaS through instances such as one-time charges, upgrades, add-ons, one-off purchases, and more.

Since the risk for unbilled revenue in SaaS is particularly high, leaving your ARR (annual recurring revenue) vulnerable.

You need to recognize revenue and be able to accurately report it for your income statement in addition to tracking metrics internally.

Risks of unbilled revenue

Unbilled revenue can lead to a delay in invoices and payments. Sometimes it can go as far as having to chase down a client and potentially send them to collections.

The process can quickly get out of hand and become complex and stressful and negatively impact your business’s financial health.

Minimizing unbilled revenue in SaaS

We’ve covered what unbilled revenue is, how it’s more common in SaaS companies than other industries, and all the downsides to it. We’ve got the problem, now what about the solution?

• Invoice right when the sale is made, don’t delay.
• For recurring bills or subscription management, set up an automatic billing system to send to the client each month so you don’t have to worry about remembering.
• Set up reminder emails to send to clients a week or few days before their payment date so they’re not caught off guard, even if they elected prepayment.

By having strategies like this in place you can protect your business and minimize the risk of losing out and having to backtrack to make up unbilled revenue in balance sheets.

Ensuring billing accuracy with CPQ’s configurable pricing rules

Prevent revenue leakage by standardizing your pricing and billing practices.

Predefined pricing rules, discounts, and approval workflows, oh my! Yes, it’s true, all of this and more is possible with PandaDoc CPQ.

This standardization eliminates discrepancies between what was quoted and what is billed.

By ensuring that every product, service, or additional fee is included in the billing process, CPQ eliminates the risk of overlooking billable items and subsequently, lost revenue.

Real-time visibility into unbilled revenue with CPQ analytics

Track unbilled revenue and take action before it affects cash flow.

CPQ analytics offer real-time visibility into unbilled revenue. With detailed reporting on pending invoices and revenue that hasn’t been billed, businesses can proactively manage their billing processes.

By providing these insights, finance and sales teams can identify potential gaps in revenue and ensure that no revenue goes unbilled for extended periods.

Aligning sales and finance teams for seamless revenue recognition

Improve collaboration between sales and finance for better revenue management.

CPQ acts as a bridge between sales and finance teams, aligning them on crucial aspects like pricing, quotes, and billing schedules, leading to greater efficiency and accuracy in their operations.

Eliminating unnecessary communication back-and-forth and saving time by providing a direct answer is a significant benefit of this approach.

This alignment promotes improved communication, fewer discrepancies, and ultimately more accurate revenue recognition, leading to a reduction in unbilled revenue.

CPQ streamlines cross-functional collaboration, ensuring businesses can efficiently track and invoice every dollar earned, leading to accurate financial reporting and maximizing revenue with the help of automation.

Conclusion

Unbilled revenue can create cash flow challenges and lead to lost revenue opportunities.

With PandaDoc’s CPQ, businesses can streamline the quote-to-invoice process, improve billing accuracy, and gain real-time insights into their earned revenue.

By reducing delays and ensuring all billable items are captured, PandaDoc’s CPQ feature helps businesses optimize cash flow and enhance financial performance.

It’s time to eliminate unbilled revenue and ensure every deal is fully billed with CPQ.

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