Revenue Assurance and Cost Assurance
Understanding Revenue Assurance and Cost Assurance issues andpractices in the Telecommunications, Media and Entertainment sectors
In the Telecommunications, Media andEntertainment sectors, as with other complex hightransaction businesses, incorrectly billing,collecting or recording of transactions can result inmillions of dollars of increased costs and lost
revenue, as well as seriously denting a company’s
reputation.The sheer amount of data processed by amultitude of different systems and the rapid paceof change in products and technology means thateven small errors in reference data or processingrules can have a huge financial and customer impact.No wonder that Revenue Assurance and CostAssurance have gained in importance and visibilityto be recognised by many Service Providers asbeing of strategic importance from both financialand customer experience perspectives.Various benchmarking exercises have estimatedlosses to be between 2%-18% of revenue, to anoutsider this could seem exaggerated, however,Revenue Assurance audits have frequentlyuncovered huge revenue leakage issues even atmajor established and mature operators - in somecases leakage has been known to represent 60%of a specific revenue stream.
In the Revenue Assurance and Cost Assurancearena, revenue losses or avoidable cost exposures
are usually referred to as ‘leakage’. Many revenue
assurance issues start off as minor losses but canremain undiscovered for long periods as they donot stand out in standard financial reporting or other business check-points. The sum of theseissues can quickly add up to major proportions.Furthermore, in the case of under-billing or non-billing, it is likely that the issue will be exploited andcan turn into a major opportunistic fraud problem.
So how does leakage happen?
The most common problems leading to leakageare related to incorrect, missing or corruptedreference data, processing rules and network or billing/mediation system configuration. A typicalService Provider will have hundreds or thousandsof processing rules throughout their technologyinfrastructure and many databases and tablescontaining customer and processing referencedata. This data is usually updated on a regular basis by network technicians, customer services,the billing team, automatic processes etc. Thesystems within which the data is stored andprocessed are regularly subject to patches andupgrades.Over time the network, mediation and billinginfrastructure becomes so complex that only a fewpeople (often, no one at all) have a fullunderstanding of the data and financial flows that
make up the company’s revenues and costs.
Given the limited capability for a completeperspective, and the rapid changes we often see, itis no wonder that some things get out of sync anderrors are made.
Business Assurance | Revenue Assurance | Fraud Management | Receivables Management