Recurring revenue means nothing to a managed services business unless its clients regularly pay their bills. Yet, most IT services businesses do not collect payments when due. In fact, it’s common for MSPs to have an outstanding accounts receivable (A/R) balance well past 30 days.
While this may be the norm, delayed payments have serious financial consequences. TSI found that after 60 days, an overdue invoice may only be worth 60% of its initial value. And after 90 days, that value may drop to as low as 20%.
To increase profitability, not to mention have the reserves on hand to survive an economic downturn, IT service businesses must capitalize on every opportunity to boost efficiency, cut costs and decrease the time between sending invoices to customers and receiving their payments.
MSPs often struggle to find the best way to retrieve an overdue payment. However, doing so is crucial because unpaid, overdue invoices hurt your MSP. You must act to keep your cash flow healthy.
Use this guide to develop action plans to convert customers to your MSP’s preferred collections process and timeline and eliminate tough discussions in the future.