The CFO of a PE-backed IT services company should look for contract leakage by having the controller match a year of invoices for the 25 largest managed services customers against their signed billing terms, and decide on contract software only after that match shows where the gaps come from.
World Commerce & Contracting, a not-for-profit association, and Deloitte, whose services include contract lifecycle management, published The ROI of contracting excellence in June 2023, from workshops, interviews, roundtable discussions and online surveys representing 1,236 organizations, collected April 2021 to December 2022. The authors estimate that average value erosion, a cross-sector average covering both buy-side and sell-side contracts, now stands at 8.6 percent, down from 9.2 percent of contract value in the association's 2014 research, with the best performers a little over 3 percent and the worst more than 20 percent. The report treats some erosion, such as from early termination, as unavoidable. The association's August 2025 paper lists invoicing errors among the many contract-related factors contributing to value erosion and loss.
Each managed services invoice follows the monthly rate per device or user, the count it applies to, any minimum count or monthly fee, any annual increase and its start date, and the out-of-scope hourly rate. Nine-67 starts with the 25 largest customers by billing over the last 12 months.
In month one, a billing analyst reporting to the controller copies those terms and clause numbers from the 25 contracts and their signed amendments into one spreadsheet. In month two, the analyst checks each customer's last 12 monthly invoices, 300 in all, against it: billed rate against signed rate, the increase against its contract date, out-of-scope hours in the ticketing system against the invoices, and the devices billed against the count in the remote monitoring and management tool for that month, and the users billed against the directory or license portal count that month, with any month for which neither tool keeps a count marked as unchecked. Each gap becomes a row: customer, invoice, clause, cause and amount, too low or too high. In month three, the controller totals the gaps by cause and as a share of those customers' billed revenue over the 12 months, for the CFO.
Before the next billing run, the controller corrects setup gaps, such as a wrong rate or a missing increase date, and works with the service desk manager so billed counts follow the device or user count and logged out-of-scope hours reach the invoice. The CFO should consider contract software only for gaps from terms the analyst could not find, such as a missing amendment. Finance's existing staff budget pays for the match, with no new license. Before any past shortfall is billed or overcharge credited, the account manager should have counsel check the contract, and the CFO decides for each customer.
An operating partner can ask each portfolio IT services company for the same numbers from its 25 customers, gaps as a share of those customers' billed revenue and the share of gaps by cause, together with the share of the company's total managed services billing those 25 customers carry, and compare only companies billing managed services on similar terms.
The 2023 report's authors called the fall from 9.2 to 8.6 percent encouraging but expected many to consider it a disappointing level of achievement and to feel that advances in technology should have provided a greater level of return, while noting that technology has generated some improvements, that a greater focus on managing contracts after award also contributed, and that progress would have been greater if contract complexity had not increased.
