Set New Client Payment Expectations the Right Way: During the Sale

One of the biggest struggles for new MSPs is creating an efficient process for getting paid in a timely fashion for the work they perform.

Whether billing a client after completing a project or sending out invoices every month as part of a recurring service offering, without effective policies and processes in place, accounts receivable balances can skyrocket in just a few months. No one needs those collections nightmares, particularly MSPs trying to gain a footing and expand operations, and without dependable cash flow, their short and long-term objectives could remain well out of grasp. 

Payment expectations may be one of the least mentioned yet most critical topics that every provider’s sales team should bring up before closing a new business deal. That conversation sets the proper tone for the financial side of the client/MSP relationship by helping minimize the confusion over invoicing and payments. Sharing the “ground rules” and the process, including methods, timelines, tools, and agreeing on specific terms, can prevent problems in the weeks and months ahead.    

What is the process? When will a new client receive the first and subsequent invoices and when and how should they make payments? Many businesses fail to answer those questions until long after their sales teams close a new deal, and the customer gets the first bill. In some cases, those conversations happen only when the person who handles collections calls to check on an overdue invoice—not an optimal time nor the most comfortable of discussions for MSPs or their clients. That situation can be awkward and set the wrong tone for a professional business relationship.

Communicate Early and Often

An upfront collections conversation helps minimize those problems. While relatively few people enjoy discussing things like billing processes, credit terms and penalties for late payments, that step is more critical than the attention it typically receives. Someone needs to have those discussions before prospective clients sign on the dotted line of a new contract—not during the sales-to-account manager hand off call and certainly not after the first month of service.

MSPs that outline their financial policies and procedures prior to “the close” are more likely to get true buy-in from the decision makers. Delaying those discussions or hoping others will handle the inevitable issues that will come to light from not reviewing that critical information can set the stage for failure. In most cases, the disappointment of not getting paid on time can be traced back to this lack of proactive communications. The timing factor means much of the responsibility for setting payment expectations falls on the sales team. While some of the more “tenured” professionals might suggest that task does not align with their job description—and in the past, they might be correct—the increasing importance of recurring revenue and cash flow invalidates that argument today. Everyone plays a part, from sales and account managers to the technical and accounting teams.

Setting proper expectations around payments, services and other deliverables is now a collective responsibility inside a managed services business. Perhaps employee job descriptions should include language about answering payment questions and helping to solve similar client-related problems? Many companies are encouraging and incentivizing cross-company engagement to tear down traditional silos of responsibility and communication and create a more collaborative, sharing, and caring environment. That doesn’t mean everyone does everything all the time but allowing employees to walk a mile in their co-workers’ shoes fosters a more understanding and supportive workforce.

That practice can greatly benefit those on the collections side of an MSP business. From the latter part of sales discussions and during account manager hand-off calls to onsite service and help desk activities, there may be opportunities to support billing and A/R. Does a prospect have questions on their invoices or payment responsibilities? Some employees may be uncomfortable asking about overdue bills, but they could collaborate on game plans with the collection team or their managers before the next engagement.

Communicate, Review, Repeat

Everyone in an MSP business can help in some manner. Since IT services firms rely heavily on their monthly recurring revenue to pay bills and expand operations, each employee has a responsibility to point out and help address cash flow concerns—including overdue invoices. Of course, to provide that support, team members need to understand the mechanics and reasoning behind billing and collections.

What should employees know? 

  • The basic invoicing process
    Does everyone understand what information goes on a client’s bill and the frequency of delivery and collections? Who is responsible for ensuring the bills go out in a timely manner and for answering questions?
  • Payment terms
    When is payment due for each invoice? MSPs’ employees should understand the deadlines and penalties for non-compliance and how those terms affects each client. That may seem like legalese to some, but this language is an important part of the financial relationship.  
  • Transaction process
    Last but not least are the guidelines that ensure proper payment of outstanding invoices. Many MSPs are moving to an autopay only method (electronic banking), such as through ConnectBooster, to eliminate the typical collections hassles and time-delays. However, it’s important that employees understand how the tools work and who to contact if a client experiences any problem with the system or has questions on payments. Many MSPs include a billing and collections check-in during quarterly business reviews (QBRs) or more frequently in the first few months after onboarding new customers.      

Ready, Set, Go!

While MSPs should follow proper accounting standards and protect client data, those who engage regularly with clients should have access to account payment status and other relevant information. The best way to boost collections and cash flow is through team collaboration and support.

Setting new client payment expectations is a team sport. By educating employees on the need for tight financial policies and providing everyone with resources to assist the collections department in its mission, MSPs can improve customer relations while strengthening their cash flow.

People, processes and automation are all essential parts of collections. ConnectBooster is a vital tool in this process. With a secure payment portal, client visibility and an easy path to autopay, customers are more capable of meeting MSP’s expectations. And MSPs can achieve the cash flow they desire, with little ongoing effort and hassle.

Schedule a demo to see how ConnectBooster makes billing and collections effortless.


MSPS Guide to Predictable Cash Flow in Uncertain Times

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See ConnectBooster In Action

See all the ways your business can start saving time and money every single time you collect a client’s payment.