Contract revenue leakage: where it happens and how to see it
Mike Demo, Founder · 17 October 2026
Revenue leakage is money you earned under a contract and never collected. It rarely shows up as one line you can point to. It leaves in small amounts at three points: before you sign, while you deliver, and after you bill.
How big is it?
World Commerce and Contracting estimated in 2014 that contracts lose 9.2 percent of their value on average. The figure came from surveys of practitioners, and the organization itself says it cannot be scientifically validated. A later study with Deloitte, across more than 1,200 organizations, put the average at 8.6 percent, ranging from just over 3 percent for the best performers to more than 20 percent for the worst. Treat these as a range, not a promise.
Before you sign
- The total doesn't match the lines. The stated contract value and the sum of its line items disagree, and nobody notices until the first invoice.
- Rates drift from the price list. A discount agreed in one conversation becomes the rate for the life of the contract.
- Scope growth has no rule. The contract doesn't say what happens when the work grows, so the extra work gets absorbed.
While you deliver
- Work runs past the line. The team keeps going after a line is used up, because nobody is watching it.
- Change orders come late, or never. By the time the overrun surfaces, the work is delivered and the conversation is an apology instead of a decision.
- Time and expenses go unbilled, or get billed at the wrong rate.
After you bill
- Invoices age. Nobody has time to chase them, so earned money sits in receivables.
- Disputes stall. A small question about one invoice holds up payment on the whole account.
- Write offs. The quietest leak of all.
A simple test
Pick three active contracts. For each line, write down the contract value, what has been delivered, and what has been invoiced.
- Any line where delivered is ahead of invoiced is unbilled work.
- Any line near its limit with work still going needs a change order conversation now.
- Then look at invoices more than 30 days overdue on the same clients.
If the test takes you more than an hour, that is the finding.
What to watch every month
- Lines at or above 75 percent used.
- Work delivered but not yet invoiced.
- Change orders opened against change orders signed.
- Invoices more than 30 days overdue.
Sources: Deloitte on the World Commerce and Contracting research; World Commerce and Contracting.