What is margin leakage?
Margin leakage is value a business loses when what was agreed, delivered, billed and paid no longer match. It is the gap between the margin a contract should produce and the margin that actually lands.
It rarely shows up as one large loss.
It builds up across thousands of small mismatches.
A supplier billed at last year’s rate, a delivered service that never reached an invoice, a payment that went out twice. Because each gap sits between two systems or two teams, no single report shows it.
The three types
Where margin leakage happens.
Supplier leakage
Paying suppliers more than the contract, rate card or delivered work supports: wrong rates, missed discounts, duplicate or unsupported invoice lines.
ExploreRevenue leakage
Delivering work, services or usage that is never billed, or billed below the agreed price.
ExplorePayment leakage
Money leaving the business that should not: duplicate, off-contract or unapproved payments, and payments to changed or fraudulent bank details.
ExploreFAQ
What is margin leakage?
Margin leakage is value a business loses when what was agreed, delivered, billed and paid no longer match. It is the gap between the margin a contract should produce and the margin that actually lands.
How is margin leakage different from fraud?
Most margin leakage is not fraud. It usually comes from errors, missed contract terms, manual handoffs and disconnected systems. Fraud is one cause of payment leakage, but only one.
Where does margin leakage happen?
It happens wherever records are passed between teams or systems: between contracts and invoices, between delivery records and billing, and between approvals and payment runs.
How is margin leakage measured?
By comparing each transaction with the agreement and evidence behind it. The difference between what should have been billed or paid and what actually was, added up across transactions, is the leakage.
How do you stop margin leakage?
By checking transactions before money moves rather than auditing after. RedOwl connects contracts, delivery evidence, supplier costs, billing and payments, and flags mismatches before approval or payment.
How much value is leaking?
Find the gap before it lands.
Start with twelve months of your own transactions. See your baseline in days, then turn it into controls that run every day.