Article | June 19, 2023

Stages Of Collection Maturity For MSPs

Source: ConnectBooster
GettyImages-1358170807 coins in jar

Like any process, getting clients to pay for the services that MSPs deliver is a continual journey. Collections is not a one-and-done venture but an area the management and financial accounting teams must periodically review and upgrade as clients, operations, back-office tools, and portfolios evolve. The strength of their cash flow and business health depends on the success of continuous improvement in processes and policies.

No organization can defy basic business principles. A well-defined and streamlined collections process is essential to the financial health of every company. Growing Monthly Recurring Revenue (MRR) means nothing without the proper systems and checks and balances—ensuring that extra income is effectively converted from invoices to cash in the bank for an MSP. Higher Accounts Receivables (A/R) should never be the ultimate objective.

Every sales growth plan should include a review of the collections process to ensure all that hard work doesn’t go without reward. MSP businesses that continually augment best practices in this area are more likely to boost profits and reduce A/R—maximizing both their cash flow and margins. Implementing effective A/R plans isn’t rocket science. Still, it does require insight into the types of transactions (i.e., recurring, one-time, both), client payment preferences and habits and other collections-related factors.

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