As the saying goes, “Talk is cheap.” Yet, when there’s a shortage of open communication between MSPs and their business clients, particularly regarding the financial aspects of their relationship, the consequences can be quite expensive. Issues tend to go unnoticed, and these inefficiencies can erode profit margins. Unfortunately, this scenario is all too familiar in the IT channel.
While managed services leaders are exceptionally adept at designing technology solutions and diagnosing complex IT issues, many are not as skilled at explaining payment processes, policies and best practices. Those communication slip-ups often come at the MSP’s expense. For example, an early disconnect in provider/client relationships can significantly impact accounts receivable balances and cash flow.
If clients do not know when or how to pay for services rendered, those transactions are more likely to occur later than anticipated, especially without a little prodding. The most significant challenge that MSPs face when it comes to collections is that their primary client base — small businesses — often have limited staff and overburdened owners. Due to their workload, paying bills often takes a back seat on their list of priorities. This issue becomes even more pronounced when suppliers fail to communicate expectations clearly or offer effective tools to streamline these processes.
Understanding how their clients operate and how to compensate for potential points of failure is critical for MSPs. Strong and clear communication can make up for some, if not all, of those deficiencies, especially with clients’ payment processes.
Build collections policies and stick to the plan
Setting proper expectations is one of the most overlooked yet critical steps in building a successful organization. To establish enduring and fruitful business relationships, it’s essential for owners, managers, employees and even customers to have a clear understanding of their respective responsibilities, particularly in terms of financial matters.
Effective communication helps make that possible. Since B2B companies need to reach a diverse community of business leaders and decision-makers, as well as end users and partners, open and sometimes pointed conversations are often necessary. Developing and delivering clear, consistent messaging around business practices and policies reduces misunderstandings and mistakes. Whether that involves an MSP’s accounts management team or those responsible for billing and collections, regular check-ins and frequent communications with key contacts tend to improve compliance.
There are several ways to streamline and boost performance with those processes, including:
1. Establish the standard: The first conversation around collections should always occur before the sales team closes the contract, including a review of the timing expectations, terms, payment tools and any exceptions. A thorough initial discussion will help reduce issues later. Miscommunications and unmet expectations can quickly impact an MSP’s cash flow and derail client relationships.
2. Email reminders: These messages have become a standard expectation in the business community. Sending timely and properly crafted email reminders to clients who fail to adhere to policies and best practices, whether a minor or a major infraction, is often the best way to prompt a response. For example, many businesses schedule reminder messages to go out to customers a day or two prior to their payment due date to spur action and prevent them from incurring late fees and receiving overdue notices. An effective email provides clients with easy-to-follow instructions, phone numbers and other contact information to simplify the process. A record of these communications should be added to each customer file as a point of reference to prevent potential disputes.
3. Regularly scheduled check-ins: Whether account managers conduct quarterly business reviews (QBRs) or arrange frequent meetings with key client contacts, personal interactions offer the best chance for engagement. A recommended best practice involves jointly reviewing the status of all aspects of the relationship. By asking questions about the invoicing process (such as timeliness and level of information) and payment methods, potential issues can be identified, even for clients with no outstanding balances.
4. Impromptu communications: As with any relationship, it never hurts to pick up the phone, check in from time to time on operations and generate a rapport with different team members. Do those involved with paying invoices have any questions? Do they know who to contact when they have invoicing problems or don’t understand the payment system? Those bonds are especially handy for an MSP’s collections team.
5. Automated cues: Most people have become accustomed to, if not reliant upon, digital nudges to keep them on track with various activities. MSPs using the ConnectBooster automated payment platform can easily schedule reminder messages that encourage clients to make or schedule a transaction. This can reduce the collection team’s burdens and anxiety.
Reduce the complexity of A/R communications
MSPs understand the value of streamlining and automating critical business processes. With that in mind, their collections teams can readily benefit from a dose of optimization and specialized IT services tools like ConnectBooster.
Improving A/R communications and boosting collections efficiency are worthy objectives. This can improve cash flow and reduce the stress of engaging in challenging conversations with clients about overdue payments. Nobody enjoys repeatedly asking customers for explanations regarding late payments.
ConnectBooster helps improve B2B communications and minimize the need for more difficult conversations by automating many critical tasks and providing an easy autopay option. Clients can simply schedule payments and, thanks to an invoice repository, instantly access their current and previous billing details.
Leveraging technology in the collections process reduces anxiety for clients and providers while improving an MSP’s cash flow and customer satisfaction. Since communications are such a critical piece of the business equation, investing in solutions like ConnectBooster that improve the flow of information and access to critical data is the smart move for savvy IT business owners.