Does data quality directly impact profitability?
Recently, in a landmark ruling, South African courts ruled against the City of Johannesburg (CoJ) in a billing dispute. The Court found that the onus is on the municipality, not the client, to prove the accuracy of the meter readings on which the disputed bills were based. Although quite a coup for customers, this ruling also means that CoJ needs to address their data issues in order to avoid similar issues going forward – issues which not only impact payment, but also have a dramatic effect on their bottom line.
Every organisation who does business, transacts. Products or services are sold to customers and invoices are raised in order to receive payment for them. This billing process is what drives business, and accurate and complete billing data is at the very core of the success of any organisation. As shown by the above court ruling, billing disputes are bad for business. Not only can they delay, or in the above case, completely cease payments, but they can also cost money in administrative and legal charges.
Disputes may arise for many reasons and in any business, from municipalities to telecommunications companies. Common disputes include disagreements between customers and suppliers over contractual terms or conditions; alleged errors in billing information, as is the case with CoJ, where readings of data were allegedly incorrect; or as delaying tactics, where customers deliberately dispute billing in order to delay or avoid payment, citing missing or incorrect information as a reason. All of these listed reasons for dispute can be mitigated if organisations ensure their data is of sufficient quality.
Quality data supported by sound data lineage can provide suppliers with valuable – and revenue saving – information. In the case of a usage based service such as that offered by CoJ, this information could include evidence that meters were, in fact, installed at the consumer sites; evidence that the correct meter was being read for each consumer; and evidence that the correct meter was tested for each case. Such information, when properly recorded and stored, proves invaluable in the event of any dispute.
Of course, billing is not the only area where poor quality data has a direct impact on profitability. Areas that could be impacted include stock and order management where poor quality data could result in costly errors; sales, where customer acquisition and retention is based on the quality of data to hand; and even maintenance services, where poor quality data could negatively impact the service provided. Our new whitepaper, Five Ways that Quality Data Drives Revenue – takes a deeper look at how quality data can deliver lasting increases in revenue.
The link to poor quality data may not be obvious – in many cases, disputes will be blamed on systems, processes or human error – but having quality data available gives suppliers the upper hand. Where disputes are raised due to errors such as a typo, they can be quashed and corrected quickly on the production of the right data. It makes sense, then, that accurate billing data be available for the complete revenue assurance process, especially given that the supplier is legally required to prove the accuracy of their bills. Organisations can leverage sound data governance and the expertise of data management partners to ensure their data is of the utmost quality in order to avoid unnecessary costs and maximise profitability.
Gary Alleman is the Managing Director for Master Data Management. Master Data Management (MDM) provides specialist solutions for data governance, data quality, data integration and MDM.