https://www.channelfutures.com/wp-content/themes/channelfutures_child/assets/images/logo/footer-new-logo.png
  • Home
  • Technologies
    • Back
    • Analytics
    • Artificial Intelligence
    • Cloud
    • Data Centers
    • Desktop
    • IoT
    • Mobility
    • Networking
    • Open Source
    • RMM/PSA
    • Security
    • Virtualization
    • Voice/Connectivity
  • Strategy
    • Back
    • Best Practices
    • Business Models
    • Channel 101
    • Channel Programs
    • Channel Research
    • Digital Transformation
    • Diversity & Inclusion
    • Leadership
    • Mergers and Acquisitions
    • Sales & Marketing
    • Specialty Practices
  • MSSP Insider
    • Back
    • Business of Security
    • Cloud and Edge
    • Endpoint
    • Network
    • People and Careers
    • Training and Policies
  • MSP 501
    • Back
    • 2020 MSP 501 Rankings
    • 2020 Hot 101 Rankings
    • 2020 MSP 501 Report
  • Intelligence
    • Back
    • Our Sponsors
    • From the Industry
    • Content Resources
    • COVID-19 Partner Help
    • Galleries
    • Podcasts
    • Reports
    • Videos
    • Webinars
    • White Papers
  • EMEA
  • Awards
    • Back
    • Excellence in Digital Services
    • 2020 MSP 501
    • Top Gun 51
  • Events
    • Back
    • CP Conference & Expo
    • Channel Partners Evolution
    • Channel Evolution Europe
    • Channel Partners Event Coverage
    • Webinars
  • Channel Mentor
    • Back
    • Channel Market Intelligence
    • Channel Educational Series
Channel Futures
  • NEWSLETTER
  • Home
  • Technologies
    • Back
    • Analytics
    • Artificial Intelligence
    • Cloud
    • Data Centers
    • Desktop
    • IoT
    • Mobility
    • Networking
    • Open Source
    • RMM/PSA
    • Security
    • Virtualization
    • Voice/Connectivity
  • Strategy
    • Back
    • Best Practices
    • Business Models
    • Channel 101
    • Channel Programs
    • Channel Research
    • Digital Transformation
    • Diversity & Inclusion
    • Leadership
    • Mergers and Acquisitions
    • Sales & Marketing
    • Specialty Practices
  • MSSP Insider
    • Back
    • Business of Security
    • Cloud and Edge
    • Endpoint
    • Network
    • People and Careers
    • Training and Policies
  • MSP 501
    • Back
    • 2020 MSP 501 Rankings
    • 2020 Hot 101 Rankings
    • 2020 MSP 501 Report
  • Intelligence
    • Back
    • Our Sponsors
    • From the Industry
    • Content Resources
    • COVID-19 Partner Help
    • Galleries
    • Podcasts
    • Reports
    • Videos
    • Webinars
    • White Papers
  • EMEA
  • Awards
    • Back
    • Excellence in Digital Services
    • 2020 MSP 501
    • Top Gun 51
  • Events
    • Back
    • CP Conference & Expo
    • Channel Partners Evolution
    • Channel Evolution Europe
    • Channel Partners Event Coverage
    • Webinars
  • Channel Mentor
    • Back
    • Channel Market Intelligence
    • Channel Educational Series
    • Newsletter
  • REGISTER
  • MSPs
  • VARs / SIs
  • Digital Service Providers
  • Cloud Service Providers
  • CHANNEL PARTNERS ONLINE
 Channel Futures

Strategy


MSPs: Time to Collect Unpaid Invoices

  • Written by Joe Panettieri 1
  • August 3, 2009
If you believe the hype, managed services are recession proof. But here's a confession: I don't believe the hype. I'm hearing from more and more managed service providers (MSPs) that have stacks of unpaid invoices from customers. No doubt, those unpaid invoices hurt MSP cash flow, R&D and business planning.

managed-servicesIf you believe the hype, managed services are recession proof. But here’s a confession: I don’t believe the hype. I’m hearing from more and more managed service providers (MSPs) that have stacks of unpaid invoices from customers. No doubt, those unpaid invoices hurt MSP cash flow, R&D and business planning. Here are some anecdotes I’ve heard from readers, plus some potential solutions to the unpaid invoice challenge.

The spark for this blog entry occurred during dinner with an MSP software executive a few days ago. The executive shared with me the following list of concerns:

  • More and more small businesses aren’t paying their monthly service fees to MSPs.
  • The MSPs, in turn, are late paying for SaaS services from the MSP software provider.
  • The SaaS provider is working hard to offer extended payment options to the MSPs — but the MSPs aren’t holding up their end of the bargain because they don’t know how to “collect” from their end-customers.

Three MSPs (one in California, one in Texas, one in North Carolina) tell me the unpaid invoice issue has grown from a minor annoyance into a major cash flow problem since around May 2009.

It’s a vicious cycle, proving that MSPs and their software providers will ultimately sink or swim together. In extreme cases, SaaS providers are turning off their services to selected, unresponsive MSPs that show no signs of paying their bills.

Money Management

My central questions:

  • Who within your company is responsible for ensuring customers pay their invoices on time?
  • And is that same person up to the task of collecting unpaid, overdue invoices?

The web is filled with guidance on this issue. As GriswoldLAW points out:

“The longer this delinquent debt sits, the harder it is to collect.”

And this debt-collection advice, offered by MoreBusiness.com during the dot-com implosion, certainly remains time.

Recession Proof? Not Quite

Generally speaking, MSPs continue to weather the economic storm better than traditional break-fix folks. But this “myth” that MSPs are recession proof and riding high during the recession has to end.

As CNNMoney pointed out in February 2009:

A new analysis of Small Business Administration-backed loans found that the failure rate has hit the double digits, with 11.9% of the SBA’s loans last year going into default.

Are your small business customers struggling with debt and therefore failing to pay your invoices? Is it time to cut them loose? Or can you find a way to have them pay up and keep them on your customer list?

Follow MSPmentor via RSS; Facebook; Identi.ca; and Twitter. And sign up for our Enewsletter; Webcasts and Resource Center.

Tags: Cloud Service Providers Digital Service Providers MSPs VARs/SIs Best Practices Strategy

Related


  • Network monitoring and management
    Malwarebytes Enhances OneView to Help MSPs' Security Business
    Security is an increasing concern for MSPs, particularly amid COVID-19.
  • Woman Thumbs Up
    HPE, Synnex Channel Execs Look Forward to Former Intel CTO Returning as CEO
    One Intel partner calls Gelsinger an industry veteran and visionary.
  • Risk, Threat, Vulnerability Assessment
    Tenable Research: Publicly Known Vulnerabilities Increased in 2020
    Ransomware was by far the most popular attack vector in 2020.
  • McAfee Employees Getting Pink-Slipped in Likely 'Belt-Tightening'
    McAfee also reportedly is closing its Israel software development center.

7 comments

  1. Avatar John Kilgore August 3, 2009 @ 12:09 pm
    Reply

    I’d be interested if this particular issue is slightly taking the pricing pressure off some MSP’s who have to factor in those unpaid invoices, or at least taking the reseller pricing pressure off of SaaS services. As MSP’s I’m sure we’ve all had at least one of our clients shut their doors in the past year and lost ‘recession-proof’ revenue and had to make it up elsewhere.

  2. Avatar Rebecca August 3, 2009 @ 12:38 pm
    Reply

    I think it was a mistake to ever think MSPs were recession-proof. Recession “resistant” might be better – but only for true MSPs genuinely developing relationships with their clients.

    We’ve worked hard over the last year to actively help our clients reduce costs and minimize their liability with aging hardware. I believe this has helped strengthen our partnerships with clients. And, of course, strong relationships help in getting paid on time. We haven’t been immune to the late payments, but when clients feel you are working in their best interest, they tend to put you higher on their list.

    We have had a far worse time working with our vendors – whether it’s having to wait for a refund for months or their help desk staffs being reduced to the point where it affects our customers. We are having to really re-evaluate some of the companies we work with.

  3. Avatar Joe Panettieri August 3, 2009 @ 2:46 pm
    Reply

    John: I’ll poke around Breakaway to see what MSPs are saying about potential easing of price pressures.

    Rebecca: You raise an important point. Build close relationships and your clients out you higher on their list as they prioritize which bills to pay first.

  4. Avatar Brian Doyle August 3, 2009 @ 11:58 pm
    Reply

    This topic is near and dear to my heart as we have recently focused a fair amount of time and energy collecting some MSP dollars that aged over 90 days. I agree with Rebecca’s comment that the majority of clients are good payers that value MSP services, but that does not keep good clients from struggling in this economy.

    Let me share some steps we did to bring these accounts up to date.

    1. Do what your contract states- Our agreements include a quarterly review; we used this as an opportunity to learn about how the economy is affecting our MSP client’s individual businesses. We also used this as a great opportunity to address outstanding receivables with the client in person.

    In most cases this single effort got us paid immediately and strengthened our client relationship.

    2. Tighten your terms- We moved all new agreements and renewals from Net 30 to Net 15 allowing us to accelerate the collections process.

    3. Create or revisit your collections process and stick to it- We learned from many of our clients that the “squeaky wheel gets the grease”. If you are not reminding them of outstanding balances, they may not feel the pressure to pay.

    Our clients shared that carriers and other suppliers are starting to make calls if companies are a day late on terms accounts, so those have become priority pay accounts. You are not out of line to ask for your money as well. Become a priority pay account (although I recommend some grace period for your better relationships).

    4. Your firm is not a bank- It is okay to remind a client that you are no different than they are, cash flow is king! Share that as much as you might like to, you cannot provide what amounts to a 0% interest loan.

    5. Look for trends- If a client repeatedly falls behind on payments and forces you to have to take steps beyond the norm to get paid it might be time to evaluate the relationship. The time spent collecting money that already should be in your pocket keeps you away from landing new clients.

    6. If you are getting nowhere, hire a professional- If you have clients that have reach the over 90 status, it might be time to engage a formal collections company. The older the receivable becomes the less likely it is to be collected, it may be worth engaging a pro and letting them take a piece of the pie once the money is collected.

    Remember a customer is a company that pays, anything else is charity. An MSP should truly be a partner with their clients, and good clients recognize that and view your payment as their part in insuring your success!

    Brian Doyle
    http://www.fandotech.com

  5. Avatar Jim Van August 4, 2009 @ 9:34 am
    Reply

    We’ve been pretty lucky in that we’ve only had three clients who have encountered difficulties, and all three were in touch with us before the problems began to impact all of us. We worked out a modified payment schedule, so they could go easy while times are challenging, and we can cover our basic costs of providing services to them.

    Still, I have to imagine that there are no shortage of companies who, like many consumers, bury their heads in the sand and cause real problems for themselves and suppliers alike. Keeping a tight leash on receiveables, and being proactive when it becomes obvious that a client is having difficulties will really go a long way towards getting paid and further cementing client trust and loyalty..

  6. Avatar StuFinancesTech August 6, 2009 @ 1:40 pm
    Reply

    I think the one thing in the MSP model that helps with problem clients and cash flow issues is that well run MSP should be in regular contact with their clients, not just waiting and cashing the checks nor waiting for something to break like in the break/fix model.

    This increased level of interaction with the clients is really advantageous when things get tough as plans can be made and surprises can be limited.

    Stu

  7. Avatar Jack Taugher August 8, 2009 @ 6:08 pm
    Reply

    We’ve signed up for the Final Reminder program from Transworld System. This is a 54-day program whereby a series of demand letters are sent to the debtors, controlled by you as to when to stop or pause the program, or push into the collection phase. Transworld Systems indicates because of the professionalism of this program that debtors take the potentiality of marks on their credit as a reason to pay that invoice. Upon receiving the funds, you suspend the demand phase series of letters and a thank you for payment goes out. Check it out: http://transworldsystems.com/services/final_reminder.asp

Leave a comment Cancel reply

-or-

Log in with your Channel Futures account

Alternatively, post a comment by completing the form below:

Your email address will not be published. Required fields are marked *

Related Content

  • The Benefits of Co-Managed IT For Enterprises in the New Normal
  • Survey: A Closer Look at Diversity in the Channel Community in 2021
  • Hornetsecurity Acquires Altaro for Expanded Security Services
  • Akamai Technologies Partners Migrating to New Channel Program

Galleries

View all

New, Changing Partner Programs: AWS, Tech Data, Avaya, Verizon

January 11, 2021

Industry Perspectives

View all

Help Your Customers Mitigate Malware: Viruses, Worms, and Trojans…Oh My!

January 15, 2021

SMBs’ Cybersecurity Risk Awareness Is Rising

January 13, 2021

Your Cloud Data Is Protected, But Is It Portable?

January 12, 2021

Webinars

View all

Blueprint for a Scalable MSSP Practice in 2021

January 21, 2021

Who’s Behind the Mask? Hacker Personas Explained

January 26, 2021

How Managed Hosting Providers Thrive with the Alternative Cloud

February 24, 2021

White Papers

View all

Why Subscription Business Model

January 15, 2021

The Ultimate MSP Guide to Sales Efficiency

January 14, 2021

Eight Reasons Why MSPs Need IT Industry-Specific Sales Tools

January 14, 2021

Upcoming Events

View all

Channel Partners Virtual

March 2, 2021 - March 4, 2021

Channel Partners Conference & Expo

November 1, 2021 - November 4, 2021

Videos and Fastchats

View all

FASTCHAT: How SOAR Eliminates Security Challenges and Elevates Service Provider Revenues

January 6, 2021

Happy Holidays from Channel Partners & Channel Futures!

December 21, 2020

FASTCHAT: How Old, Unpatched Technologies Are Creating New Security Threats for MSPs and Their Customers

December 3, 2020

Twitter

ChannelFutures

.@IBMServices snaps up #MSP Taos for #hybridcloud expertise. dlvr.it/RqggQR https://t.co/Fy3uPDtLNw

January 16, 2021
ChannelFutures

.@LenovoBusiness launches its thinnest #ThinkPad to date @CES, revamped ThinkBooks and #ThinkReality glasses.… twitter.com/i/web/status/1…

January 16, 2021
ChannelFutures

Help your customers mitigate #malware @Tech_Data #cryptolocker #antivirus #ransomware #cybersecurity… twitter.com/i/web/status/1…

January 15, 2021
ChannelFutures

Advantages of the Subscription business model for MSPs and IT Resellers @kaspersky dlvr.it/RqgDJn https://t.co/ay694fudp3

January 15, 2021
ChannelFutures

Cloud #distributor @Pax8 launches in UK with leadership team in place. dlvr.it/RqfJWx https://t.co/RsKDCowM5V

January 15, 2021
ChannelFutures

bit.ly/3oO2vFY twitter.com/Craig_Galbrait…

January 15, 2021
ChannelFutures

The Ultimate MSP Guide to Sales Efficiency @zomentum dlvr.it/Rqc63q https://t.co/rHIVLkR01K

January 15, 2021
ChannelFutures

Eight Reasons Why MSPs Need IT Industry-Specific Sales Tools dlvr.it/Rqc62k https://t.co/MQDcIYc7G9

January 15, 2021

MSSP Insider

Newsletters and Updates

Sign up for The Channel Report, Channel Futures Update, MSP 501 Newsletter and more.

Live Channel Events

Get the latest information on the next industry-leading Channel Partners event.

Channel Partners Online

Want more? Find more channel news and analysis on our sister site, Channel Partners.

Media Kit And Advertising

Want to reach our audience? Access our media kit

DISCOVER MORE FROM INFORMA TECH

  • Channel Partners Online
  • Channel Partners Events
  • MSP 501
  • MSSP Insider
  • IoT World Today
  • Webhostingtalk

WORKING WITH US

  • Contact
  • About us
  • Advertise
  • Newsletter

FOLLOW Channel Futures ON SOCIAL

  • Privacy
  • CCPA: “Do Not Sell My Data”
  • Cookie Policy
  • Terms
Copyright © 2021 Informa PLC. Informa PLC is registered in England and Wales with company number 8860726 whose registered and Head office is 5 Howick Place, London, SW1P 1WG.
This website uses cookies, including third party ones, to allow for analysis of how people use our website in order to improve your experience and our services. By continuing to use our website, you agree to the use of such cookies. Click here for more information on our Cookie Policy and Privacy Policy.
X