Why every MSP needs an invoice and billing solution
You’ve done the work—now it’s time to get paid. Efficient billing and invoicing are a critical part of running a successful business. However, for MSPs that offer different services to many clients, this function can quickly get complicated. Managing billing and invoicing manually can be frustrating, time-consuming, and prone to human error.
MSP billing software can drastically reduce the time you or your employees spend on invoicing, following up on overdue bills, and reconciliation. Plus, these platforms can provide insights into cash flow and profit loss, supporting greater efficiency and greater profitability.
Let’s dig into the advantages and features of managed services billing and invoicing solutions and why they are a smart business investment.
How manual billing hurts your cash flow
There are four main ways that manual billing could be hurting your business. Over time, these inefficiencies make business growth more difficult and prevent MSP employees from focusing on work that matters.
Manual processes + complex invoices = time down the drain
When you’re billing and invoicing manually, you’ll need to look at reports for each client to see what kind of work has been done during the billable period. You may also need to go into your hourly tracking or ticketing system to find and add up all of the hours spent by your technicians on each task, calculate the total cost, then manually enter or copy and paste them into the invoice. You may also have to look at each client’s contract to ensure you are billing your services at the agreed-upon rate and in the correct billable periods. Finally, you’ll have to find some way to remember to follow up on invoices to make sure they are paid and send out reminders to clients who are late.
Sound tedious? It is. Not only will it take time you could be using on other more important tasks, it can drain you of the energy you need to focus on more important things that help you improve and grow your business. Plus, when you use manual processes, you’re more likely to make mistakes, leading to errors that could irritate your clients or cause you to omit billable services or hours.
High operational labor costs with no pay-off
Because it takes so much time, manual invoicing and billing can drive up costs with little benefit to your business—and can even incur more costs due to errors and inefficiencies.
For example, you’ll have to pay someone to enter data into a billing system, which can take several hours or even days. If you do it yourself, there’s also a cost in the lost time that you could have spent working with clients, developing strategic plans for growth, or promoting your business to potential clients.
In addition, when you make errors, someone has to manually investigate, reconcile, and correct the mistake, costing even more time. You may also need to spend time communicating with clients to explain invoices, correct problems, and resolve disputes.
Finally, manual invoicing also requires you to create a system to remind you when invoices are due, such as creating reminders on a calendar, checking whether they have been paid, and sending messages to clients to remind them at different intervals—another manual process. All of these tasks incur labor costs without adding any revenue or value to your business.
Billing disputes that tarnish your reputation
A billing dispute can have significant repercussions for your business’s professional reputation. For example, complex invoices that must be done manually may take longer than expected, leading to delays in sending them to clients. As a result, the client receives them much later than the billing cycle specified in your agreement, making it difficult for them to manage their expenses and forcing them to manually adjust their accounting and budget—costing them time and money in extra labor costs and potentially affecting their cash flow.
In addition, because your billing and invoicing staff is so busy with manual tasks and you don’t have a system for responding to inquiries, they aren’t able to respond immediately to the client’s concerns about these delays and penalties. The client, unhappy with delays and lack of communication, might post about their experience on public forums, social media, and industry sites. Word gets around, and soon you’re seeing a drop in new business and maybe even losing clients.
Missed chances that bleed profits
MSP billing software offers features that provide insights that can help you identify areas where you are losing profits as well as opportunities to maximize them. For example, many solutions enable you to track how clients are using your services, showing where you might be able to upsell them on more or expanded services. They can also show what services are underutilized, suggesting it might be more efficient to stop offering them.
MSP invoicing solutions can also show where there are obstacles to steady cash flow—such as billable periods that are too long and clients that routinely pay late. In addition, reporting and notifications can alert you when a contract is up for renewal, giving you the chance to approach the client about updating the agreement to better reflect their needs or adjust your prices.
How does MSP billing software work?
By and large, MSP billing software functions similarly to invoicing solutions for other types of businesses. Generally, there is a user-friendly dashboard that you’ll use to access features and configure to your needs by inputting client information as well as your service plans, pricing structures, billing periods, and so on.
Typical features of an MSP billing platform include:
- Time tracking where your employees can log work hours.
- Usage-based billing, which allows you to charge clients based on the services or resources they use.
- Automated invoicing that pulls information about services and hours, calculates the cost, and sends an itemized invoice to clients according to the billable periods specified in your agreement.
Learn more about how automated invoicing can help you get paid faster with this handy checklist.
- Alerts and notifications to inform you and your clients of upcoming contract renewals, payment dates, or issues with services or billing.
- Reporting and analytics tools for insights into late payments, invoice status, service issues, and other billing-related areas.
- Self-service portals where clients can view and pay bills, see detailed breakdowns of services and fees, and manage their accounts.
- Subscription and service-level agreement management to ensure invoices accurately reflect contract details.
Most MSP billing solutions are designed to integrate with existing systems, but it does require some planning and consideration to ensure that your chosen solution seamlessly fits into your tech stack. Make sure to evaluate different products for compatibility with your CRM, accounting software, and project management platform. Once you’ve chosen a platform, test it before you complete a full implementation to make sure it incorporates the right data, correctly calculates charges, and generates invoices accurately.
How automated MSP billing software can help your business
Send bills faster
Assembling an invoice can take a surprisingly long time, even for a long-standing client. From gathering a comprehensive list of all services rendered, calculating the cost of technician time, and filling out each line of the invoice, it's possible to spend hours generating and sending out invoices, especially if you are compiling quotes by hand in spreadsheets.
MSP billing software can dissolve all of that chaos in a snap. With templates, auto-populating fields, and integrations across remote monitoring and management (RMM) tools, professional service automation (PSA) solutions, and other core business applications, an MSP billing system simplifies and automates the invoice-building process.
Make bills look more professional
MSP billing software adds a professional look and feel to invoices. Most options have templates designed to look official and organized with clearly defined services. Often, you can customize them with your company logo.
You can also send invoices—ideally in the cloud—directly to clients with the click of a button. It’s a much more efficient and secure method compared to sending a spreadsheet in an email. Plus, you can set up auto-reminders as due dates come up, helping you get paid faster.
Ensure bills are comprehensive
It's time to send an invoice, and your technicians are scrambling to assemble a comprehensive list of everything they worked on last month. After painstakingly putting together the invoice and sending it to the client, someone discovers that a technician's hours were off or a hardware purchase or software license was overlooked. Your team is frustrated, and so is the client when you have to send an additional invoice or a corrected one.
Does this sound familiar to you?
MSP billing software integrates across all your organization's tools and functions, reducing human error and other mistakes. This happens because:
- Technician timesheets and purchase orders are connected to the system.
- Service level agreements (SLAs) are clearly tracked.
- Recurring items auto-populate and get reconciled each month based on changes implemented in the customer environment.
- SKUs and license counts are accurate, helping you retain the trust that you have established with that customer.
With more accurate billing, your team deals with fewer billing disputes, which leads to more money in your pocket.
Save your employees time—and make them happier
All the activities above—including tracking down timesheets, finding serial numbers, and double-checking orders—drain time, motivation, and energy. With manual billing, technicians spend their workdays sifting through documents rather than focusing on interesting challenges and solving client issues, and your business development team spends time cobbling together invoices rather than winning new business or creating proposals.
An MSP billing platform takes an immense burden off employees. With templates, automation, integrations with core service solutions, billing reconciliation with vendors, cloud-based billing, and automatic reminders, employees (and leadership) get precious time back to focus on more important and valuable tasks.
Increase customization of pricing and billing plans
When you’re offering different services to different clients, billing can’t be one-size-fits-all. MSP invoicing and billing software lets you customize your services to better meet the different needs of your clients. Some examples of these kinds of features include:
- Tiered pricing structures with various service levels at different prices.
- Dynamic pricing rules that automatically adjust costs according to different criteria, such as the number of users or devices.
- Multi-currency support that lets you bill and receive payments in foreign currency.
- Flexible billing frequency, which allows clients to choose the billing period they prefer, such as monthly, quarterly, or annually.
Having to deal with clients who fail to pay invoices on time—or ever—and their impact on your cash flow is one of the more challenging parts of running a business. MSP cloud billing software can help minimize delinquent clients with:
- Automated reminders that alert clients of upcoming due dates.
- Recurring billing that sends bills on a regular schedule for consistency.
- Multiple payment options, such as credit cards, ACH transfers, and other methods.
- Autopay options for credit cards to reduce the chance of overlooked bills (and the ability to offer a discount for clients that choose this option).
- Automatic application of late fees to motivate clients to pay on time.
- Automated workflows that escalate reminders and submit accounts to collections based on predefined deadlines.
Informing clients of your processes for handling late payments ahead of time can also help prevent delinquency, support cash flow, and build mutually respectful relationships. For more information on how automation can help minimize delinquency, check out our webinar, 6 Ways to Get Paid Faster with Automated Invoicing.
In some cases, you may want to take it a step further with software specifically designed to help automate the payment process. By integrating technology such as WisePay with PSA software, your clients can take advantage of quicker payment without the need for a separate accounting platform.
Build client trust
MSP billing software provides smooth, customized, and consistent billing, which goes a long way toward cultivating trust and satisfaction with your clients. Here’s how:
- With invoices that clearly describe each charge, customers can quickly see and understand how costs relate to services provided, reducing the risk of misunderstandings or disputes.
- Self-service portals empower clients to access past bills, update their account information, and review their contracts, offering improved communication and greater transparency.
- Security measures integrated into these billing tools assure clients that their financial information will stay safe and private.
- Predictable timelines for billing help clients plan their budgets more effectively.
Billing and invoicing can be a hotspot for disputes, especially when manual systems cause a lot of errors. When you use dedicated software for your MSP billing system, clients feel reassured by the greater reliability and accuracy.
Finding the right MSP billing software for you
Every business needs to get paid so it can keep the lights on, compensate employees, and grow—which requires consistent and efficient billing. But without a managed services billing solution that simplifies and automates the process, you can find yourself spending way too much time painfully assembling invoices across multiple workstreams, services, and teams. The right billing and invoicing solution can help you adhere to billing best practices, reduce billing headaches, and bill more efficiently.
ConnectWise PSA billing reconciliation helps you eliminate hours from your billing process each month, reduce manual invoice errors, build a better relationship with clients—and even save you money while improving efficiency. A Forrester Total Economic Impact™ study of the ConnectWise platform found that it improved the productivity of finance teams by 25 percent and led to an average saving of $238,798 over three years.
With streamlined usage-based cloud vendor billing, features that include the ability to prorate bills and flag price fluctuations, and greater insights into revenue and profitability, this all-in-one solution helps you keep clients happy and supports your growth. See how ConnectWise PSA billing reconciliation automates and simplifies cloud vendor billing by starting your free demo today.