As an MSP, if you cross your fingers before checking your bank account, you need to pay more attention to cash flow management.
Cash flow is one of the least glamorous parts of running an MSP. But it’s also one of the most critical. Revenue may look solid on paper, but uneven billing, delayed collections, and unchecked subscriptions can leave even growing firms scrambling to cover expenses.
MSP owners who have mastered cash flow say it takes discipline, repeatable processes, and a clear understanding of recurring revenue.
What Successful MSPs Do Differently
John Ahlberg
Successful MSPs say cash flow doesn’t improve by accident. It improves when owners treat it as a process, not a once-a-month check-in.
Take, Waident Technology Solutions CEO John Ahlberg, who covers “anything with a blinking light that plugs into the network,” for local and national companies. “Every month, we go over finances,” Ahlberg explained. “We look at expenses, revenue, plans, with a rolling four quarter review.” He also prepares a business plan each year.
Rayanne Buchianico reviews finances with her customers regularly as well. “We have a process with a weekly cash flow forecast with a flash report of total cash, cash flow, AP, and AR,” said the CEO of ABC Solutions LLC, an MSP accounting firm offering services including fractional CFO and exit planning.
Despite that, the question she gets most from MSP owners is, “When will I run out of money?”
MRR Must Cover Your Expenses
Corey Kirkendoll
For many MSPs, recurring revenue is the foundation of stable cash flow. It has to go beyond just looking good on paper.
“Manage your cash flow off MRR,” advised Corey Kirkendoll, president and CEO of 5K Technical Services just north of Dallas. “All of your expenses should be paid by MRR, with special projects as icing on the cake.”
Controlling expenses takes effort, Kirkendoll admitted. “Track endpoint licenses to be sure you’re billed correctly. Look at your utilization rate per tech per number of endpoints.” Automation allows his techs to handle 250 to 350 endpoints.
Buchianico suggested also looking at recurring subscription charges. “Do it by vendor. If you have Teams, don’t pay for Zoom.”
Bill Faster to Get Paid Faster
Billing is one headache that can lead to collections if done badly.
Rayanne Buchianico
In fact, it was such a chore for Buchianico in her first two years as a CPA that she was afraid to send invoices, she admitted. “It’s a huge pain point for MSPs, and some take three days. It takes me about 45 minutes to send 70 invoices. If it takes you more than two or three hours, you’re doing it wrong.”
Buchianico tells clients to invoice product sales ASAP. Don’t wait for the first of the month; invoice labor every two weeks at the longest, and one week, if possible.
If a customer needs special tech service hours, “Bill them while their tears are still wet,” Buchianico recommended. “All billing should be due on receipt. No terms.”
Meanwhile, Kirkendoll bills monthly on the 15th, due by the first of the month. “For projects, I send a quote, then send an invoice for 100% of the product and 50% of the labor. All due before we start ordering and scheduling,” he said. “We’re not a bank for our customers.”
Cash Flow Discipline Fuels Growth
For MSPs, managing cash flow requires consistency. Regular reviews, disciplined billing, and making sure recurring revenue covers fixed costs can reduce financial surprises and give owners more confidence when it’s time to invest, hire, or grow.
Expert Tips to Manage Cash Flow
Here, industry experts share their top advice for ensuring you are keeping cash flow positive:
- Rayanne Buchianico: Pay yourself first. Every week, transfer money to your savings account. Don’t pay everything else and save what’s left.
- Corey Kirkendoll: True up your licenses each month before invoicing. Trust but verify. Upsell to your current clients — assessments, VoIP, etc. Increasing existing customers is like adding two or three new customers each year.
- John Ahlberg: Manage your cash flow more than just monthly. It takes time and effort, but it’s worth it. Treat cash like it’s the company’s money, not just a personal account for you. If a special situation pops up, get approval. Also, get a ‘real’ accounting firm that holds you to standards.
Featured image: Alexandr Peers — stock.adobe.com
