[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column][vc_column_text]****This blog piece is from one of ConnectBooster’s newest contributors, Adam Bielanski. Check out Adam’s wisdom below.***

Over the past several years, I’ve been helping MSPs improve their business performance.

That consultative work covers some critical organizational processes, including enhancing their sales engine to boost revenue and profitability. That requires extensive collaboration with employees, managers, and owners, as we work to strengthen operations and improve the long-term prospects and overall performance of their businesses.

Some of the more common issues we run into with our MSP clients include missed payroll and weak A/R (Accounts Receivable) procedures. It’s not unusual because technical professionals don’t always manage their businesses by the numbers.

A majority of MSPs we work with don’t take the time to chart their accounts or discern which of their services are profitable — and which aren’t.

Even though they provide valuable services, many of these companies are still having difficulty collecting what they’re owed.

And that starts a cycle that often leads to missed payroll and wildly inconsistent cash flow.

How to break bad collections habits

So how can an MSP break that cycle and improve their collections process?

It starts with communication.

The best way to address missed payment issues is by directly discussing the problem with the client. We often find that people don’t pay their bill for specific reasons. Their perceived quality of service level may have been lacking, or the method provided for paying their bill was overly complicated or confusing. And some MSPs simply don’t follow up with clients regarding their outstanding AR balances as invoices pile up because they’re afraid to ask their clients for money.

MSPs love doing their work. They will engineer and create technical solutions all day long, but asking for the money is not in their “comfort zone.”

Make permanent improvements

The easiest way to fix this is to create a process that becomes repetitive.

Collections is all about replication. The system does not have to be complicated, but it should be entirely automated. Their clients should receive notifications or reminder emails using the tools available in their ConnectWise and ConnectBooster’s system.

The clients of MPS’s don’t always realize they’ve missed a payment (or two) because they’re also busy focusing on their tasks. That’s a business reality. Providers must get better at communicating the expectations, such as when they need to be paid for services and how the automation process works. That helps avoid payment delays or failures in the future.

Chart the finances

It can be an infuriating lesson when you dive into some providers’ investments.

It’s frustrating when you see how many MSPs give clients a free ride, receiving no money yet continuing to provide them with high-quality services.

It’s a scenario I run into all too frequently when reviewing one of my provider client’s financials. They might tell me their best customer accounts for 30% of their overall revenue, and then, when I look at their account, find out they aren’t paying their bills.

Is it any wonder the MSP is having difficulty meeting payroll?

That’s why MSPs have to do a better job of tracking their financials. It’s too easy to lose sight of where the money’s going and how well the business is doing. Without that constant oversight, an MSP’s ability to make payroll and pay its outstanding debts can be significantly impacted.

Dig deeper

How an MSP looks at AR reveals a lot about their business and its growth potential.

When I start working with a new client, I always ask for details on their terms for payment expectation. Net 30 days is the norm, but when I ask how it matches with their current AR balances, many have no idea.

The reality is most of their clients take 60 days to pay, while more than 90 days is not uncommon. That is a horrible situation for MSPs.

They can avoid almost all those delays and non-payments with automation. It’s all about creating a viable system.

If managing their collections properly and getting paid on time for all completed work, MSPs should have no problems scaling their businesses incrementally over time. A system built on consistency will ensure greater profitability and limit the number of work providers do for those who fail to meet payment obligations.

By using tools like ConnectBooster to automate the billing process, a lot of pain associated with bad collections methods will go away. Automation also gives their sales and services teams access to timely financial information for each account, ensuring the work they do is productive and profitable. Then they can focus on the things that improve cash flow and grow the business.[/vc_column_text][/vc_column][/vc_row][vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern” css=”.vc_custom_1505165169445{padding-top: 35px !important;padding-bottom: 35px !important;background-color: rgba(136,136,136,0.08) !important;*background-color: rgb(136,136,136) !important;}”][vc_column width=”1/3″][vc_single_image image=”10531″ img_size=”medium” alignment=”center” style=”vc_box_border_circle_2″ qode_css_animation=””][/vc_column][vc_column width=”2/3″][vc_column_text]

About Adam Bielanski

Adam Bielanski has been involved in IT and managed services since 2002, when he founded his first respite, Valley TechLogic, a managed service business in Merced, California. Adam then started consulting on his own in 2012, which led to his firm becoming one the industry’s leading ConnectWise Consultants. Adam founded Sierra Pacific Consulting in 2016, with a firm focus and on ConnectWise, Accounting, and Business Process services that are battle tested and proven effective in the face of evolving market share, best practices, and hungry coyotes.

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