ConnectBooster Blog

Streamline Your Cash Flow: Focus On The Big Picture

There are lots of buzzwords businesses like to use to market their products and services. Words like“streamline” is one that gets thrown around quite a bit without adding substance to the conversation. But when it comes to talking about streamlining your cash flow, that isn’t just fluff. We take it seriously.

When we encourage MSPs to streamline their cash flow, we’re not using it as a trendy catchphrase. Our intent is to stress the importance of automating all your business processes so you get paid as much as possible.

In an ideal world, customers would always pay every bill on time, and your business wouldn’t have to do anything to make that happen. But we all know that’s not the way it actually works.

For most service businesses, collecting payment for the work they perform can be a tedious and painfully slow process. It often requires a lot of manual effort and tediously long waits, with many opportunities for human error. All of those work against streamlining your cash flow.

So how do you actually simplify those processes? In many cases, all it takes is a few small changes to your operations.

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Why You Deserve Consistent Payments From Your Managed Services Clients

Why do so many MSPs undervalue their services and let their work go unpaid?

In an industry where hard work, expensive equipment, and a high skill set is a requirement, most IT service providers do not give themselves enough credit. Their labor often goes unrewarded thanks to their chronic late paying clients.

One of the biggest reasons is IT providers do not treat their business as a utility and tend to let payments slide. If someone doesn’t pay their internet bill, services get shut off, but MSPs frequently go ninety days or more, waiting for a client to pay for the thousands of dollars owed for equipment and support.

Providers offer high-impact services with the associated costs. That may be people, software, hardware, rent, or other expenses – just like any other business.

The truth is MSPs should consistently receive money in a timely fashion for the services they provide. That expectation has been set in other industries that are just as business-critical, so why shouldn’t channel partners fall in line?

They can, and should. The first step is changing the way your business sets expectations in the sales process. Getting the payment conversation out of the way up front will improve the process and ensure IT companies have a much more reliable cash flow.

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Go Big in 2018: Transform How Your Business Collects Payments

As your business sets out to achieve your goals for 2018 you probably plan to grow, maybe by 10%. Now as you’re plotting out what it takes to reach that goal, the first step should be confirming if you’ve collected your finances from last year.

One of the most significant roadblocks to growth is finances; poor cash flow and a lack of assets are bad news when trying to solicit loans from banks to invest in your company.

Start the year off right with a strong focus on your business’ financial situation.

Transform how your team collects payments. That’s an excellent way to ensure you can meet your business growth targets in 2018.

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What’s A Realistic Time Frame For Getting Your MSP Clients On Autopay?

Like any small business owner, our partners want to set realistic financial targets when they implement new technologies, especially those that affect their bottom line. Proper expectations are a crucial component of any good business plan so, of course, most MSPs want to know how long it will take to perform various tasks, including getting their clients to use autopay.

The simple answer requires a good understanding of their existing customers. New clients are easy ‒they should use autopay from day one. As our partner, Kelly Siegel, CEO of National Technology Management suggests, “from the very beginning salespeople need to tell prospects ‘we are a checkless company.’ Ninety-nine percent of the time they will be fine with that.”

Many of our partners simply add an autopay requirement to their prospects’ proposals and begin discussing payment provisions during the sales process. Relatively few will ever push back if they value your services and understand the safety and convenience automated payments bring to their business.

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Automation, Innovation And Efficiency: Integrations Are An MSP’s Best Friend

Life is all about connections. From the friends who encourage and help along the way to teachers and co-workers who make introductions and offer referrals; those are the invaluable contacts that make us stronger.

The same philosophy applies to business technologies. Nothing in the managed services space exists in a vacuum. MSPs rely on their tools to gather and distribute data related to networks, devices, and applications. When performance is optimal with everything looking clear on the management console, life is good for everyone. If those lights shift to yellow or red, tech firms get busy.

Integrations make that possible. Without those connections between remote monitoring and PSA tools, the life of an MSP would be much more complicated. Communication of network and device issues would slow, and some steps in ticket creation and resolution might require manual intervention. Those inefficiencies cost time and money.

What good would a BDR (backup and disaster recovery) solution be if it took ten or fifteen minutes to notify an MSP when a client’s system failed? Or resulted in a similar communication delay with security applications? The damage to the customer’s business and the provider’s reputation could be substantial.

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Payment Automation Leads to Fewer Business Distractions and Better Financial Control

****This blog piece is from one of ConnectBooster’s newest contributors, Paul Nebb. Learn more about Paul below.***

My team wasn’t new to payment processing when I took a peer’s advice three years ago and switched to ConnectBooster. We had a program that would charge clients’ credit cards at the appropriate time, with an extension that imported information back into our QuickBooks system.

And it worked okay ̶ that is until our customers needed to make changes. And, as every MSP knows, there are always changes. The biggest problem we encountered was when a client added a new employee and needed to increase licenses or user logins for cloud services. For example, if a customer had five Office 365 seats and wanted us to bump them up to six, we would have to go back to the website of our payment processor and update the contract twice.

The first was to input a proration period and the second was to adjust all the months going forward. We rarely had the time or determination to make those changes fast enough and would end up losing money. Those manual steps may not seem like they would require a significant effort, but busy MSPs often have higher priorities when those types of change requests come in.

Service comes first. It was easier to take those small financial hits than to keep our clients waiting. But those lost dollars add up over time.

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Collections or Managed Services Business? Spend More Time Driving Revenue, Not Chasing Past Due Invoices

Well-run organizations rarely have cash flow problems. They develop goods and services that others want, build solid margins in their pricing models, and execute on their commitments. Most importantly, they create effective payment policies and processes to strengthen finances and provide room for future growth.

A note at the bottom of each invoice stating that all money is due within the next 30-days is simply not enough. Nor is that occasional email reminder that a customer’s payment is past due by a week ‒ or maybe a month.

Those are the passive, outdated collections methods that MSPs can’t afford to rely on if they wish to grow profitably.

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The Three Collections Tips MSPs Can Use to Scale Their Businesses

****This blog piece is from one of ConnectBooster’s newest contributors, Jason Etheridge. Learn more about Jason’s below.***

During the early days of our business, we were lucky. Our clients were usually up to date on their payments, and we experienced very few billing issues. We did have the occasional customer who would get 4 or 5 months behind, but it didn’t seem like that big of a deal. In other words, few “red flags” ever went off when our collection processes were manual.

I know better now. Slow payments can quickly lead to major cash flow problems for a small business, but we were lucky. Our old methods may have cost us a fair amount of money over the years.

The reality is the number of slow or non-paying clients was growing as we grew. That’s an unfortunate byproduct of success. AR creeps up over time when using manual collection processes. We knew we were doing something wrong and needed to fix it.

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No More Excuses: Why Every MSP Deserves To Be Paid Promptly

There is a certain element of people who are willing (and able) to whip out their checkbooks or plunk down their credit cards the minute they receive a quality product or service.

Think Apple and Tesla; two companies that make a lot of their money up front. Many will stand in line and pay a premium to obtain their latest and greatest offerings.

For example, Tesla has taken more than 300,000 reservations for its Model 3 — that’s over $300 million in deposits for a vehicle most of those people wouldn’t receive for another 18 to 24 months.

While MSPs are rarely in a position to generate that type of brand loyalty, many tend to underestimate the value of their services for small business customers. Some seem to worry too much about the competition swooping in and stealing away their best clients the minute a price increase goes into effect, or when their payment processes change.

The real concern should be the effects on cash flow from charging too little and allowing AR to escalate.

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Three Strategies for Improving Managed Services Collections and Cash Flow

****This blog piece is from one of ConnectBooster’s newest contributors, Kelly Siegel. Learn more about Kelly below.***

It’s not easy being an MSP.

From the endless days (and nights) focusing on the evolving needs of your customers there are plenty of things that can raise your blood pressure.

Collections and payments is a big one.

No one likes to have to make collections calls, and without an electronic payment system in place, managed services providers carry a substantial accounts receivable burden.

The good news? There are some best practices you can follow to significantly shorten your average receivables. Let me share three valuable steps MSPs can take to solve their late payment issues.

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