Article | June 19, 2023

Implement MSP Billing Best Practices To Encourage On-Time Payments

Source: ConnectBooster
GettyImages-1330234595 invoices

Accounts Receivable (A/R) is not revenue. The money a customer owes an MSP should not be factored into the cash flow equation until that payment has actually cleared the bank. You cannot spend an IOU.

Despite this reality, far too many businesses still consider accounts receivables to be as good as cash. While financial companies often buy outstanding debt for a fraction of its face value, there is no substitute for receiving on-time payments from clients that require no human interaction. No need for phone calls, follow-up emails, or reminder letters; just a notification of each bank deposit made within the previously agreed-upon amount of time.       

On-time payments should not be an afterthought for MSPs, nor an unobtainable wish. But more often than not, on-time payments are not prioritized. On average, MSPs wait 60 days or more before receiving payment! Businesses need procedures, policies, and systems to create invoices and quickly convert those accounts receivables into cash—and IT services firms are no different. An IT services firm may have slightly more complex billing due to the nature of variable billing agreements. Nevertheless, MSPs can achieve predictable on-time payments from customers. The timing and workflows are critical, as are steps for validating and tracking all the various payments to ensure nothing gets lost amidst the chaos of running an MSP. 

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