IT Firm Checklist for MSP Finance Leaders

IT Checklist for Financial MSP Professionals

Every day, without fail, we are approached by clients seeking guidance on the critical tasks and processes that directly influence their financial bottom line. It's a common query that underscores the importance of strategic financial management in the MSP industry. By understanding and prioritizing these key elements, financial professionals can steer their organizations towards greater profitability and success.

For most Managed Service Providers, the main focus is understandably on providing excellent technical support and innovative solutions. However, for the Managed Services Provider who is truly ramping up their business, cutting-edge technology is only half of the equation; effective financial management is the other. While MSP finance is not just about keeping the books in order, it is about knowing how to leverage an organization's unique recurring revenue models while understanding related operational costs and utilizing financial indicators to identify growth opportunities in IT services.

If you are proficient in the financial performance of your msp, it means that you have a good understanding of cash flow, client profitability, and the economics of service delivery. This enables owners and financial leaders to make fact-based commercial decisions with confidence, maximize pricing strategies, and assure that each dollar is spent to grow their mushroom operation.

This checklist is a comprehensive guide for financial professionals within the MSP industry to streamline their operations and maximize profitability. By utilizing these essential tasks and processes, you can effectively prioritize and manage essential financial activities across your entire organization. From monthly meetings to credit card management and reconciliation to ensuring efficient processes for expense reimbursement and invoicing, this checklist covers all the critical areas that contribute to financial success in the MSP space. Following these guidelines can enhance your financial management practices and drive your business toward greater efficiency and growth.

1. Monthly Meetings

• P & L Review
• Balance Sheet Review
• Benchmark, Goal setting meeting
  • Managing by the numbers, Bering McKinley Targets

2. Company Credit Cards

• Management of cards
• Credit card statement reconciliation

3. Processes

• Reimbursed expense
• Receive money, and deposits
• Check writing
• Purchasing hardware/software from vendors
• Reconcile bank accounts
• Review/process AP vendor bills
• Update bank activity in the financial system
• Ensure all timesheets and expense reports are submitted and approved/process expense reports
• Service time invoicing
• Agreement invoicing
• Product invoicing
• Reconcile necessary balance sheet accounts
• Payroll entry/processing/submission
• Payroll entry into the financial system in a timely manner

4. The Chart of Accounts meets the minimum criteria

• Account numbers
• Payroll is broken down by
• Service COG
• Sales Salary/Commission Expense
• Admin salary expense
• Owner compensation
• Service revenue is broken down by
• Hourly
• Project
• Recurring
• Sales Expenses represent their own category
• Sales Salaries
• Sales Commissions
• Sales Tools

FAQs

1. Why is MSP finance different from traditional small business finance?

MSPs have the complexities of operating on a recurring revenue basis, contract-based billing, and service level agreements make what MSP finance does more complicated than traditional small business finance. Often, accurate forecasting, deferred revenue accounting, and profitability by agreement are key aspects otherwise left on the table in traditional accounting.

2. What are the most common financial mistakes MSPs make?

Some common occurrences are underbilling managed services, not managing aging receivables, delayed or lack of real-time reporting, and not aligning finance with service delivery. Missteps and inaction will have a significant impact on cash flow and long-term profits.

3. How often should an MSP review its financial checklist?

Once a quarter is the ideal breakdown. This enables the MSP to be in front of billing errors, cost increases, and client contract changes. The regularity of reviews also helps with keeping KPIs goals aligned with growth and the cash flow healthy.

How did you do?

Having trouble implementing and meeting all of these tasks? Bering McKinley offers Business Performance Assessments designed to help existing businesses and MSP leaders move away from just diving into the business and staying busy. We help you evaluate areas for improvement and processes that will guarantee you work smarter and gain positive ground.