Monthly recurring revenue is the engine that drives a managed services business. The more of that steady income that flows in without major delays or additional costs, the more money MSPs will have available for paying bills and investing in new tools, programs and people. Strong cash flow fuels healthy, organic growth
The age-old problem for IT firms (or any business) is identifying and adopting the most cost-effective processes for converting those predictable income streams into actual bank deposits. Cash flow is entirely predicated on receiving payments for services the company renders, so the faster that turnaround time, the better the organization’s financial situation. That’s business basics 101.
MSPs are masters of the recurring revenue and cash flow concepts. However, the collections process tends to foil success for many as clients either delay or withhold payments or their checks get “lost in the mail.” That last point happens more often than most business owners are willing to admit.