Booking vs Billing vs Backlog: Explained.

We’re sure that the main, overarching goal for your organization is business success. In order to achieve this, however, you need to be able to adapt to changes in the market and have the right information to allow you to do this. This is where booking vs billing vs backlog comes into play. The bookings, backlog, and billings (or BBB) information that you have is a crucial part of your success. 

Most higher-ups rely on inconsistent information and data that are not updated regularly enough. This leads to poor business decision-making and thus performance too. But, with BBB you’ll have a comprehensive view of your business. This means that you can optimize processes in all areas, not just one. 

In this article, we’ll explain the differences between booking vs billing vs backlog, and give you all the details you need to know. 

The Definitions Of Booking Vs Billing Vs Backlogs 

As we have mentioned, BBB information consists of critical metrics for your organization to note. Essentially, it gives you a view of your organization from various angles, which allows you to plan well for the future and to adjust your activities based on present trends in the market. In other words, you will be optimally prepared for what’s to come, if you make use of this information. 

Commonly, two additional elements are also considered when looking at the BBB metrics. These are Cancellations and Returns. We will discuss these later. Before we get to that, let’s take a look at the definitions of booking vs billing vs backlog. 

Bookings 

Bookings are reports of expected sales. These sales need to be thought out, outlined, and arranged for, so knowing about them ahead of time gives you a head start. It also gives management and the executives an idea of what can be anticipated. 

A booking occurs when a customer makes a commitment to make a purchase from your organization. This means the sale is not yet finalized, but it is probable that it will be. With this information, you are able to assess and quantify orders in the ongoing financial period. 

You will also have a clearer understanding of the trends in your sales, as bookings show you which of your products are performing well and which are not. As a result, you will better be able to decide which products need more marketing attention and communication efforts. 

Billings 

Billings are different from bookings because they report sales that have gone through. These sales were made and invoices have been forwarded on to clients or customers. In most cases, billings are directly related to revenue

Backlogs 

Backlogs show information on goods that have been sold but are not able to be invoiced yet. This occurs when an item is not in stock or in inventory, or cannot be delivered presently. Having this information gives you the power to take action when there are issues with orders that are placed but not delivered. 

It is important to take note of any and all changes in your backlog. This is because these changes are usually early signs of some changes or shifts in your business. As such, they need to be analyzed quickly so that you can take whatever action is needed. 

For example, if you see your backlog growing larger, then your business is likely to be growing due to increased sales. 

On the other hand, however, if the size of your backlog is decreasing then there is likely to be a problem. Issues could mean your sales have dropped or could be related to market trends, supply chain, and many other areas. If this is the case, then it is advised that you look into the drop in your backlog to rectify the issue if possible. 

Other Metrics to Note In Booking Vs Billing Vs Backlog

Let’s get back to the two additional elements that we mentioned earlier: Cancellations and Returns. These metrics and the information related to them are closely connected to the BBB metrics and they are equally useful to your business. 

Cancellations 

These are portrayals of when an order gets canceled. However, it is only logged as a cancellation if the order was already both booked and billed prior to the cancellation. 

The reason why this is an important event to note is that it results in actual loss. Your business has spent manpower, time, and resources on securing the sale and preparing the product for delivery. As such, you have lost revenue. 

Returns 

The other important event to consider in regards to booking vs billing vs backlog is the instance of returns. This is when customers or clients return items they have purchased from you after they receive the items. You must make note of the reasons why customers return your products. If you don’t, you could have many repeats of this, as you would not have fixed the issue the customer brought up.

Using Booking Vs Billing Vs Backlog For Business Success 

As you can see from the above, using the BBB metrics you can gather information to form a relatively precise and detailed idea of the way your business is going. For instance, you’ll be able to tell which products bring you the most revenue. You will also have an idea of whether you will meet various goals in terms of sales and revenue, whether your orders are being delivered on time, and more. 

So, how else can you use BBB information to better your business? 

Decision-Making 

Since BBB gives you information about sales, revenue, finances, profit, and more, you will be able to make better decisions. You’ll know how much money you can expect to come into your organization, and thus how much you can afford to spend, for example. 

Predictions 

It’s always good to be prepared for what’s to come. Using your BBB data, you can look at historical trends to judge how your business efforts might go in the future. It can give you an idea of whether your processes are working and can even tell you if you need to up inventory for the coming financial period. 

Overview 

Looking at BBB information can help you to see the bigger picture. It allows you to focus on the organization and its processes as a whole, rather than looking at each department separately. This gives you the power to react to business-critical issues or questions much faster. 

What Else Do You Need To Know? 

There are a few more points of information that you should take into account before you jump into analyzing your booking vs billing vs backlog information. Here is a list of what you should consider: 

  • While each individual metric is useful on its own, they are a lot more useful when you look at them together. This means that you may need to integrate data, which might be difficult. 
  • It may be necessary to employ technology that helps you to organize and integrate data. 
  • It can be useful to share BBB data with employees. Giving them a 360 view of the organization can help their understanding of processes and thus increase their productivity. 

Final Thoughts 

When it comes to booking vs billing vs backlog you must remember that each individual metric is equally important. You should also remember that they are closely related, and thus should be analyzed together to get the most accurate view of your organization and the direction that it is heading in. 

Using these pieces of information, you can better understand your sales reports, and you can gain insights into how to optimize your sales processes. Furthermore, your decision-making will be better than ever.