A month ago, cash flow might not have been your biggest concern. At that point, many MSPs, like other business owners, were focusing their efforts on transitions: preparing employees to work from home and reconfiguring workplaces to meet social distancing rules and best practices. With those tasks out of the way, most are shifting their attention to longer-term priorities such as planning upgrade projects for clients, improving productivity, and stabilizing cash flow.
The financial side of the house is a significant focus for many MSPs. With uncertainty around customers’ ability to pay, providers should prepare (if they haven’t already) to address potential billing and collections requests from businesses that are having their own cash flow issues. The unfortunate reality is that financial stress is sure to remain a topic of discussion for the foreseeable future.
Now is the time to be proactive. MSPs should be streamlining and strengthening their collections processes during this ‘pause’ while implementing automated recurring billing solutions to optimize cash flow. Begin by reviewing all your company’s current procedures and tools, including your PSA and accounting package, and assessing AR balance trends over the past couple of years.
What a great time it is to tweak or tear down and rebuild those systems. Start by addressing the issues that have perpetually slowed payments, beginning with invoice generation, and proceeding through each step of the collections process until a transaction is completed in your automated recurring billing platform (if you have one). Assess and document each problem or area of concern.
Recover lost time
A key thing to evaluate is how long does it take to collect the money your business earns. After a tech leaves a client site or you complete a billable month of managed services, the clock should start ticking. Do you have the ability to generate invoices as soon as the calendar flips or a service ticket closes?
Integrations between PSA platforms and accounting packages allow MSPs to create and send those statements in real-time, and to expedite their collections with the addition of an automated recurring billing tool. Providers who properly connect and configure all those systems can save a lot of time and frustration and typically see significant improvements in their firms’ cash flow.
Removing people from the process eliminates a variety of delays: no more excuses for forgetting to send out invoices or sitting on a pile of customers’ checks for deposit.
Automated recurring billing ensures the collections process runs on time and in the proper order based on your MSP business’ needs and contract requirements. Lessening the ‘people component’ of these activities also minimizes the headaches for everyone.
Automated recurring billing boosts productivity
From the leadership team and employees to those responsible for making the payments on the client-side of the relationship, few individuals enjoy handling these transactions. Collections require a certain mindset.
That is not a knock on the financial geniuses, just an acknowledgment that some professionals would prefer not to be responsible for collections calls or writing virtually the same check every month to cover identical service charges. Monotonous duties often lead to procrastination, and when your employees or customers take more time to complete these responsibilities, it can negatively affect your cash flow. Few companies recognize the over-achieving collections teams (though every business really should).
Automated recurring billing eliminates some of the least popular manual tasks in an IT services organization. These tools can help MSPs improve employee morale and make life (and work) easier for their clients’ accounting teams as well. Who wouldn’t appreciate having to make or receive fewer emotionally draining collections calls?
Reducing that type of stress is just one benefit, as cutting manual procedures also helps businesses improve productivity. With automated recurring billing, MSPs can be a lot more efficient with their most valuable resource ‒ employees. Providers need these types of solutions to control personnel costs, especially in the current economic environment.
Tally the financial impact of automated recurring billing
Creating structure in a typically chaotic process is an essential benefit of automated recurring billing. However, the reasons why these platforms have become a standard requirement for channel companies are more profound. While MSPs are leveraging these technologies to streamline operations, they also help improve the bottom line.
An automated recurring billing system like ConnectBooster gives providers more control over their collections processes, cash flow, and profitability. That latter part comes from speeding up the payment process and with MSPs saving between eight to ten hours per month or more. Automated recurring billing systems make it easier for providers to manage these critical financial activities in their businesses, and they also allow team members, including techs and other professionals who may answer clients’ requests, to spend more time on their primary tasks.
The collections process doesn’t need to be complicated, especially when there are so many other things you and your clients need to focus on right now. While you have time and your client’s attention, be sure to emphasize the benefits of automated recurring billing and, if needed, sweeten the deal with win-win incentives.
For example, if clients ask for an extension on paying their bill, offer to divide and apply the current charges across the next six month’s invoices if they sign up for your automated recurring billing option. Since both parties are making minimal concessions while improving their short- and long-term financial positions, MSPs can consider that to be a mutually beneficial opportunity.
Raise your collections process standards during the pandemic. Fine-tune your policies and procedures and implement an automated recurring billing platform to reduce AR and boost cash flow. Even if revenue drops short-term, your MSP will be in a better position to make a quicker recovery ‒ and have less need for other people’s money. Stabilize your cash flow with an automated recurring billing solution like ConnectBooster.