Should I manage to booked revenue or completed revenue?
Manage to completed revenue and watch booked revenue as the leading indicator. Booked revenue is work sold or scheduled. Completed revenue is work finished and invoiced. The gap between them is backlog plus leakage, and those are opposite conditions: backlog is revenue arriving later, leakage is revenue that never arrives. Reporting only one number makes them indistinguishable, which is where most arguments about the month come from.
A job passes through more states than most reports show
Between an inbound lead and money in the bank there are at least five distinct states: opportunity created, appointment scheduled, work sold, work completed, invoice collected. Every one of them can be counted as revenue by someone in the building, and in most companies at least two of them are, in different reports, without labels.
That is why the marketing manager, the service manager and the owner can each state a revenue number for the same month and all three be defensible. They are counting different states.
The gap is two things, not one
If booked revenue exceeds completed revenue in a period, the difference is either backlog or leakage.
Backlog is fine. It is work that exists and will complete later, and in a growing or seasonal business it should be large. Leakage is not fine. It is booked work that dissolved: cancellations, no-shows, reschedules that were never rebooked, jobs that shrank at the point of invoice.
- Backlog test. Does the booked work still have a future date on the schedule? If yes, it is backlog.
- Leakage test. Was the job cancelled, closed unsold, or invoiced for less than it was sold for? If yes, it is leakage.
- Aging test. Booked work with no scheduled date and no activity for weeks is usually leakage that nobody has closed out yet.
Which number to use for which decision
Use booked revenue to manage capacity and staffing, because it tells you what the crews are about to face. Use completed revenue to evaluate marketing, because a lead source cannot be credited with work that never happened. Use collected revenue for cash decisions, and never for source evaluation, since collections lag is about your billing process, not your demand.
The one number worth publishing that most companies do not have is the ratio itself: what share of booked revenue in a cohort eventually completes. Once you know that ratio and its normal range, booked revenue becomes a legitimate forecast input instead of an optimistic guess. Connecting the field service record to the marketing record is the whole job of an integration layer.
How to report both without confusing anyone
Put both on the same view, label the period basis explicitly, and show the conversion ratio between them as its own line. A dashboard that says booked, completed and the percentage that converted stops the definitional argument permanently.
Then track the ratio over time. A stable ratio that suddenly drops is a leakage event and deserves investigation the same week, not at the month-end close. Threshold alerts on that ratio are exactly the sort of thing daily intelligence briefs exist to catch.
Topics: booked revenue · completed revenue · backlog · leakage · reporting
Have a version of this question about your own business?
The useful answer usually depends on which systems you run and how they're connected. That's a conversation, not a blog post.