****This blog piece is from one of ConnectBooster’s newest contributors, Stuart Bryan. Check out Stuart’s wisdom below.***
When running an MSP, we are expected to stay ahead of the trend and remain leaders with current technology in all aspects of our business.
But in reality, I know that’s not true.
Sometimes we let certain parts of business remain stuck in the past. My business, I-M Technology, especially struggled to manage the financial side of our business when it came to processing ACH payments.
We faced the same problems other MSPs do, and that was the slow and inefficient method of our clients’ payments were trapped at our bank, which cost our organization precious time and valued resources.
Small local banks are not the best
We previously worked with a smaller bank to handle our large volume transactions, and boy did that throw a wrench into our finances.
The biggest issue was managing our client’s transactions. The payment processors and banks didn’t understand my business, and wouldn’t budge when it came to limitations that affected our cash flow. Again and again, I was told to restrict the volume we were processing, and our bank and processor added gratuitous fees to enforce their strict policies.
If that wasn’t enough, the bureaucracy and “old school” manual methodologies slowed down payments for our work, which caused our A/R to rise and our cash flow to tank.
Processing ACH payments through our bank also negatively affected our customer and vendor relationships. When we had our money tied up at the bank and limited deposits due to their ineffective process, we had difficulty paying our suppliers and supporting our managed service clients.
Don’t get me wrong, our bank was full of good people, but they weren’t meant to handle our type of businesses.
When it came to things like ACH processing, local banks typically don’t have the facilities, technology, and mechanisms that MSPs need.
With a local bank here are some of the pitfalls:
- Fees are high as are transnational costs.
- Extra (and unnecessary) expenses because of fee’s that eat away at profits.
- You can’t scale your company with inefficiencies like this, and as you grow, you need a payment solution that delivers more.
Cash flow is everything. If you don’t have money available, it’s much harder to manage your business. As the Bible says, “the borrower is the servant to the lender.”
If you have to ask for your money and be stuck with the bank’s terms, it puts you in a weaker position. That can lead to begging and borrowing, and figuring out which vendors to pay each month. No one wants that.
We found a better way take process ACH payments
Eventually, our company ditched the slow process our bank offered for ACH and turned to ConnectBooster.
We now have a client portal where our customers can manage their transactions and review their statements and invoices. And the integration with ConnectWise also gives them access to their individual billing information.
Everybody who does business with us pays on an ACH managed services agreement, because it’s cheaper than credit cards…and our clients love it. From a collections standpoint, our transaction rate has dropped to an average of 20 days (or less).
It blows away our old method of handling ACH payments out of the water. Eliminating the fees from our bank more than paid for ConnectBooster. The cost of entry was less than what we used to spend on ACH fees at our bank. We gave up nothing and added some benefits for our clients.
Between adding ConnectBooster and integrating it with ConnectWise and our accounting software, our cash flow is transformed. From the initial invoices to the last bank deposit, each step in the billing and payment process is handled by the applications with minimal oversight.
Banks and processing companies often put up unnecessary hurdles and make it difficult for MSPs to manage their money. We made the switch to position our company as a technology leader in the MSP world and transitioned away from the old, inefficient way of processing ACH payments.
Being an MSP means being a leader in the world of technology, automation, and security.
You can transition your business like I did and save all the pain that come from using a bank to handle your payment processing. There’s a better way to operate your finances, and your money doesn’t have to be tied up.
About Stuart Bryan
President of I-M Technology, LLC, a leading managed IT services provider serving CT, MA, and RI. Stuart has a broad base of knowledge in the areas of business, and IT infrastructure. Frequent IT commentator with articles published in leading industry magazines. He lives in the quiet corner of CT with his wife, daughter, a cat and a dog.
To learn more about his company, click here.