The managed services industry is experiencing a fundamental shift in how customers evaluate and purchase IT services. As businesses commoditize MSP offerings, they make purchasing decisions based on operational differentiators like payment flexibility, cash flow impact, and administrative efficiency rather than purely technical capabilities. This evolution presents both a challenge and an opportunity for service providers that understand how to leverage embedded payments and financing as strategic growth tools.
Payment Flexibility Success by the Numbers
When MSPs integrate payment flexibility into their service offerings, they consistently outperform competitors that treat billing as a back-office function. For example, autopay customers settle invoices in 1.76 days. That compares with 15.4 days for traditional payment methods. Additionally, customer demand for automated payment rules is growing 27% faster than partner acquisition rates.
Research shows that flexible payment terms can lift sales by 17% and increase average order size by 21%. Yet many MSPs still haven’t integrated embedded payments. This creates a significant opportunity for service providers that recognize payment flexibility as a competitive differentiator.
In fact, autopay adoption through service agreements is up 5% year over year when adjusted for partner growth. Customers want convenience, predictability, and control over their cash flow. MSPs that deliver these capabilities consistently win more deals and achieve higher client retention rates.
5 Strategic Approaches to Payment-driven Growth
Here are some steps you can take to help your MSP leverage payment services.
1. Bundle Payment Automation Directly into Service Contracts
The most successful MSPs are embedding payment automation as a core service feature, not an add-on. For example, when you buy something online, you don’t expect to mail a check. B2B customers increasingly have the same expectations.
Here’s what works:
- Lead with outcomes, not features. Instead of selling “payment processing,” sell “administrative efficiency.”
- Make autopay the default option. Structure contracts where automated payments are standard. Manual billing should be the exception requiring justification.
- Create tiered payment flexibility. Offer different payment schedules based on service tiers, like monthly for basic plans and quarterly for premium services with discounts for longer commitments.
When MSPs implemented this approach, they reported 30% faster customer onboarding and 18% higher margin revenue. When payment friction disappears, sales conversations focus on value instead of logistics.
2. Implement ‘Pay-over-time’ Models for Large Projects
Businesses often expect financing options for significant IT investments. Smart MSPs are partnering with embedded finance providers to offer flexible payment terms without taking on credit risk.
This is similar to how consumer payments evolved. Buyers are used to seeing “pay-in-four” plans for buying sneakers or electronics. B2B customers want similar flexibility for their technology investments, especially when cash flow is tight.
Here are some practical applications:
- Project-based Financing: Break large implementations into manageable monthly payments over 12-36 months.
- Seasonal Payment Flexibility: Align payment schedules with customer cash flow cycles. This is crucial for retail, hospitality, and other seasonal businesses.
- Graduated Payment Structures: Start with lower payments that increase as the customer realizes value from your services.
This approach also resonates with SMBs that need enterprise-level services but have working capital constraints. You solve their IT challenges as well as their cash flow issues.
3. Transform Collections into Customer Success
The traditional approach to late payments — chase, call, collect — is broken. The MSPs that see real success reframe collections as customer success opportunities.
Payment behavior is often the first indicator of customer health issues. Companies that proactively address payment challenges tend to have stronger, longer-lasting customer relationships.
Here’s the new approach:
- Proactive Payment Health Monitoring: Use payment data to identify customers that might be struggling before they become delinquent.
- Flexible Payment Rescheduling: Offer payment plan modifications before customers ask, showing you’re invested in their success.
- Value Reinforcement During Payment Conversations: Remind customers of the specific value they’re receiving and ROI they’re achieving.
Smart MSPs are using payment data as an early warning system for customer health. This allows them to intervene with additional support or service adjustments before accounts become at-risk.
4. Optimize Payment Costs and Fee Structures
This is where embedded payments become a genuine profit center through cost optimization rather than new revenue generation. Instead of absorbing expensive credit card processing fees, leading MSPs are switching to lower-cost payment methods and strategically passing fees to customers.
The math is compelling. When MSPs stop paying 2.9% for Visa/Mastercard and 3.5% for American Express transactions, they significantly improve their margins per client. By encouraging ACH payments and implementing fee pass-through structures, MSPs can dramatically increase their profitability without raising service prices.
Baxter Lanius
Here are the opportunities:
- Reduce Payment Processing Costs: Switching customers to ACH eliminates the 2.9%-3.5% credit card fees you’re currently absorbing.
- Pass Credit Card Fees to Customers: When customers choose to pay by credit card, they cover the processing costs rather than impacting your margins.
- Improve Net Profitability Per Client: Lower payment costs directly increase your bottom line without changing your service pricing.
Companies that implemented these payment optimization strategies saw up to 80% cuts in operational costs. This transformation is accelerating across the industry as MSPs recognize that payment method optimization directly impacts profitability.
5. Leverage Payment Data for Strategic Account Management
Payment behavior provides detailed insights into customer health and expansion opportunities. The MSPs maximizing this advantage are using payment data to:
- Identify expansion opportunities. Customers who consistently pay early or increase payment frequency often signal readiness for additional services.
- Predict churn risk. Payment delays or disputes frequently precede contract cancellations, giving you early warning to intervene.
- Optimize service delivery. Payment timing patterns can reveal seasonal needs or cash flow challenges that inform service recommendations.
Advanced MSPs are creating customer success dashboards that combine service performance metrics with payment health indicators. This holistic view enables proactive account management that prevents churn and identifies growth opportunities.
The Bottom Line
The embedded payments market is projected to reach $690 billion by 2030, growing at 36% annually. For MSPs, this represents a fundamental shift from viewing payments as a necessary evil to embracing them as a strategic advantage.
The most successful MSPs recognize that payment flexibility is more about getting paid faster. It’s about removing barriers to customer success, creating new revenue streams, and building deeper customer relationships. As customer payment expectations evolve, the competitive advantage will belong to service providers who can seamlessly integrate flexible payment solutions into their core offerings.
The managed services industry is at an inflection point where payment flexibility will increasingly determine competitive positioning. MSPs that implement embedded payments and financing solutions now will establish significant advantages in customer acquisition, retention, and revenue generation over those who continue to treat billing as a back-office function.
Baxter Lanius is founder and CEO of Alternative Payments, a B2B payments infrastructure company that helps MSPs modernize their payment workflows. Lanius previously served as principal at Apollo Global Management.
Featured image: TStudious — stock.adobe.com
