DEFINITION
Financial Leakage
Financial leakage is the loss of value through process and control failure rather than through business decision or customer default. It includes overpayments, duplicate payments, unclaimed discounts and rebates, unbilled revenue, and excess pricing against contract.
Leakage differs from fraud in intent, not in effect. Most leakage is unintentional, which is precisely why it persists: no one is concealing it, and no one is looking for it.
It concentrates at the boundaries between systems and teams — where procurement hands to accounts payable, where delivery hands to billing, where contract terms are agreed in one system and executed in another. Those boundaries are where analytics are most productive.