ISP and Fiber Finance, Part 3
Board-Ready Metrics That Reveal Revenue Leakage Early
Revenue leakage does not require forensic analysis to detect. It requires a small number of structurally correct indicators that show whether delivered service is being converted into cash with discipline.
Boards do not need operational exhaust. They need early-warning signals tied to the predictability of cash, margin, and partner settlement. The eight metrics below form a minimum viable control set. Together, they expose leakage before it reaches the income statement.
Each metric answers one question: Is delivered value being converted into revenue without friction or loss?
1. Active-but-Unbilled Rate
What it tells the board: Whether free service exists in the network.
Definition:
(Active services − billed services in current cycle) ÷ active services
Target: <0.25%
Alert: ≥1%
This is the cleanest indicator of leakage. If this metric is red, revenue assurance is broken regardless of growth.
2. Activation-to-Invoice Lag
What it tells the board: Whether order-to-cash is under control.
Definition:
Median days from service activation to first invoice
Target: ≤1 day
Alert: >3 days
Lag converts directly into lost cash, credits, and DSO inflation. Growth amplifies the damage.
3. Pricing Policy Exception Rate
What it tells the board: Whether pricing discipline exists.
Definition:
Invoices with non-catalog pricing or unauthorized discounts ÷ all invoices
Target: <1%
Alert: ≥2%
This single metric replaces multiple discount and override indicators. Boards care about policy enforcement, not discount taxonomy.
4. Credit and Refund Velocity
What it tells the board: Whether defects or abuse are accelerating.
Definition:
(Credits + refunds) ÷ billed revenue (rolling 30 days)
Target: <1.5%
Alert: ≥3%
This metric functions as a canary. Sustained elevation indicates structural failure, not customer behavior.
5. No-Charge Operational Rework Rate
What it tells the board: Whether margin is leaking in operations.
Definition:
Jobs reopened within 14 days with zero charge ÷ completed jobs
Target: <5%
Alert: ≥8%
Missed billable work is invisible to finance unless explicitly measured. This metric makes it visible.
6. Wholesale / Open-Access Settlement Variance
What it tells the board: Whether partner economics are stable.
Definition:
|Expected − actual settlement| ÷ expected settlement
Target: ≤0.5%
Alert: >1%
Persistent variance ties up cash, creates disputes, and erodes partner trust.
7. Dispute-Adjusted Days Sales Outstanding
What it tells the board: True cash discipline versus noise.
Definition:
Standard DSO plus DSO excluding disputed balances
Target: Stable or improving trend
Alert: >10% quarter-over-quarter increase
Boards should always see both numbers. The delta reveals whether DSO drift is operational or structural.
8. Data Quality Failure Rate
What it tells the board: Future leakage risk.
Definition:
Orders failing validation (address, plan, tax, duplication) ÷ all orders
Target: <1%
Alert: ≥2%
Bad data compounds silently. This metric predicts downstream billing errors before they surface.
P.S. If you missed it, go back and read The Operational Controls That Prevent Revenue Leakage at Its Source
Coming next: Why Activation-Linked Billing Is Becoming a Non-Negotable Control in Fiber Networks
