MRR without MRW (Monthly Recurring Work)
Work less while earning more. That’s the goal for any business owner. With the right offerings and partnerships, MSPs can readily increase their recurring revenue streams without stretching their resources to the limit or having to grow headcount.
Wouldn’t it be great if your clients were willing to pay handsomely for your services and sign multi-year contracts to solidify the relationship? Even better, imagine if you could pile on more customers with no concern about the ability to support infinite growth. That may seem like a dream, but many MSPs are turning that fantasy into reality with a robust portfolio of high value, low cost, scalable services, and products.
Like any worthwhile endeavor, growing and maintaining a highly profitable business isn’t easy. For most MSPs, revenue tends to ‘ebb and flow’ if you don’t focus closely on both existing and prospective customers, so you can expect to face many challenges while scaling your managed services operations.
Like it or not, winning more revenue is a battle all businesses face, and you have three options for generating the revenue and cash flow needed to scale your MSP:
- Sell more to existing clients (increase “wallet share”)
- Increase margins on the products and services you deliver
- Target and win new business (close prospects)
Sounds simple, right? Unfortunately, most MSPs have limited resources to work with, including a shortage of people, capital, and time. Strategic growth plans need to take all of those factors into account, and some of your specific objectives may require some compromises. For example, you may need to scale back the product portfolio or partner with third parties to reduce support responsibilities and maximize your cash flow.
SMBs need payment processing as a service
Collecting payments is the lifeblood of every SMB, and savvy channel professionals are taking notice. With ever-increasing requirements to meet regulatory compliance and standards, organizations are pressed to identify and implement technical solutions to address the shifting conditions. Change can be frightening to many business owners.
Those unknowns tend to create more opportunities for savvy channel professionals, especially in the SMB space. The old IT industry adage “there’s margin in the mystery” certainly applies, and the opportunities in payment processing are often overlooked.
Traditional payment processes like sending invoices and checks via the mail service can be slow, costly, and add risk. In addition to all the manual steps required to print and fold paper, stuff, address, and stamp envelopes, it takes a fair amount of time to transport, sort, and deliver each bill and payment. As businesses grow their clientele and expand their services offerings, that process can become unwieldy. It doesn’t need to be that complicated since MSPs can provide more efficient and secure options.
Electronic billing and payment systems are the new standard. No longer do businesses have to rely on one of the slowest and most inefficient processes ever created to get paid each month. With centralized online systems and the option to automatically pay recurring invoices using ACH bank transfers or via credit cards, there’s no need for your clients to worry about postal delays, incurring late fees, or making up ‘lost in the mail’ excuses.
The latest generation of business professionals understands the value of automation. Raised in the computer era, those individuals typically have a higher level of comfort with technology and, in many cases, have a stronger desire to conduct online transactions. Those business leaders are seeking companies with the ability to provide more innovative options, including billing transparency and the flexibility to change payment methods easily. The market demand for those solutions is strong and trending upward.
Let the SMB sip from your champagne
MSPs may differ from their customers in that most providers already focus heavily on tech, security, and automation. Typical SMBs, however, often don’t know that better solutions exist and are usually quite receptive to the guidance of their trusted IT services partners.
After all, a secure payment portal offers many advantages, so why not pass those advantages on to the end-users? Top MSPs can save 10-20 hours each month by eliminating redundant accounting tasks, significantly reduce their accounts receivables, improve billing transparency for their clients, and minimize the PCI compliance responsibilities for their business.
As a bonus, a provider can significantly reduce credit card processing fees by transitioning its customers to ACH payments. With a secure platform in place, you can refocus on fine-tuning the solutions and services your clients pay for and forget the stress associated with collections.
Not only will Payment Processing as a Service (PPaaS) help your team generate new sales engagement opportunities and create a ‘stickiness’ that strengthens your firm’s customer retention efforts, it is an entirely scalable product. The resources required do not change as customers grow, but the revenue generated does. The total margin per customer can easily be increased by 5-10% with virtually no extra expense.
PPaaS is a valued and growing market opportunity for MSPs since they intimately understand the challenges of a service business model. If your clients deliver professional services and bill their customers on a monthly recurring basis, a secure payment portal with payment processing capabilities is no longer just an option. Think landscapers, accountants, advertising firms, architects, financial advisers, engineers, and consultants‒each generating a regular flow of invoices with little or no automated tools.
Summing it up
A secure online payment platform is essential for easing client collections headaches, strengthening cash flow, and meeting the high demands of PCI compliance. By partnering with reputable institutions offering a generous share of payment processing margins, you can leverage the latest technology to make all of those possibilities a reality for your clients.