Leakage, the three gaps

Overview

Leakage is money you earned but never collected. The Leakage tile on the Margin page puts one number on it, and behind that number Verinode follows every job through four stages, what you estimated, what got approved, what you billed, and what you actually collected. Every dollar that falls out between two stages is margin walking out the door.

Verinode splits the total into three gaps so you can see where it leaks, not just that it leaks:

• Approval gap, you estimated for it, but it was not approved.
• Billing gap, it was approved, but you never billed it.
• Collection gap, you billed it, but the cash never came in.

Where to find it

Open Margin from the sidebar at iq.verinode.ai/margin. The Leakage tile sits in the Explore row and shows the monthly figure (the yearly total spread across twelve months). The tile's small bar splits that figure into the three gaps in one glance. Tap it to open the Findings view with the underlying decisions and signals.

How it works

Verinode reads four amounts off each job and adds them across your whole book:

• Estimated, what you wrote the work up for.
• Approved, what the carrier or client signed off on.
• Billed, what you actually invoiced.
• Collected, what landed in the bank.

The three gaps are simple subtractions between neighboring stages:

• Approval gap = estimated − approved
• Billing gap = approved − billed
• Collection gap = billed − collected

Add the three together and you get the total leakage, which is the same as estimated − collected: the full distance between what you wrote up and what you kept.

Approval gap, written up but not approved

This is the work you estimated for that the carrier or client never approved. In restoration terms it is your supplements and line items getting cut down: you scoped and priced the job at one number, the approval came back lower. A wide approval gap points at your write-ups and your supplement process, is the documentation strong enough, are the right line items in, is a particular adjuster or carrier consistently trimming what you submit?

How to close it: tighten the estimate-to-approval path. Strengthen supporting documentation, submit the supplements you are entitled to, and watch which adjusters and carriers cut hardest, that pattern shows up in your adjuster scorecards.

Billing gap, approved but not billed

This is money the carrier or client already agreed to that you never invoiced. It is the quietest of the three because nobody is fighting you on it, the approval is sitting there, and the invoice simply never went out, or went out for less than the approved amount. This is pure self-inflicted leakage: work done, sign-off in hand, cash left on the table.

How to close it: make sure every approved dollar gets billed. A billing gap usually means invoices lagging behind approvals or jobs closing without a final invoice reconciled against what was approved.

Collection gap, billed but not collected

This is the classic accounts-receivable problem: you invoiced, and the payment has not arrived. It is the slowest bleed and the one most tied to cash flow, the longer an invoice ages, the more it drags your runway.

How to close it: work your aging receivables and shorten days-to-pay. This gap is where your Cash Flow figures and invoices and cash come in, the same billed-but-unpaid dollars show up there as aging buckets.

1. 1Open the Leakage tile and read the split in the bar, approval, billing, collection.
2. 2Attack the largest slice first; each has a different fix.
3. 3For the approval gap, tighten write-ups and supplements.
4. 4For the billing gap, bill every approved dollar.
5. 5For the collection gap, work your aging receivables.

Best-practice example

Suppose the tile shows most of your leakage sitting in the approval gap. That tells you the problem is upstream, at write-up and supplement time, not in your billing office or your receivables. Fixing your collection process would not move it, the fix is stronger documentation and a tighter supplement process, and the adjuster patterns behind it are the first place to look.

Data sources