Revenue leakage: how to stop the loss
Signing new customers, re-signing existing ones or trying to upsell them. These activities keep your sales team busy to maintain and grow your revenue base.
And yet, many MSPs have sources of revenue already in hand that they are failing to collect because they simply lack the internal processes to accurately capture it, month to month.
Revenue leakage is an old problem for MSPs. Even larger ones we talk to struggle with it. The reasons are simple, even if the solution hasn’t been.
Take any cloud service, from VMware to Veeam, from AWS to Google and Azure. The processes to provision any of these services focus on the technical. How an MSP’s finance department will make sense of it all to bill each client is an afterthought. When a report is run, it’s on the architecture, the virtual infrastructure and the basket of services provided. There is little if any correlation with an actual customer ID or the specifics of their contract.
Does this sound familiar?
You know what the consequences are of that. Your business suffers through it every month. One person has to manually pull a report, then correlate that spreadsheet with another which lists the specific services provided to each customer. Only once all this is reconciled can data be fed into the billing system.
It’s a costly, time-consuming slog that inevitably contains errors and inaccuracies.
Compounding this is the fact that an enterprise customer might call your service desk at any time to makes changes or additions to their service package. They need more computing power, or storage, or what have you. The standard workflow for such requests may involve a sales guy as well as a systems engineer, but the finance department is often left out of the loop. Come month end, finance doesn’t know that a particular customer must now be billed for usage beyond what’s specified in their contract.
How much is this costing you?
We sat down with one MSP recently that took six months to fully audit their customer accounts and ensure no money was being left on the table. Considering service and usage can fluctuate month-to-month, that’s just not good enough.
Based on our experience, most MSPs have revenue leakage in the range of five per cent. Take a mid-sized MSP with MRR of $250,000. Five per cent each month adds up to $150,000 in lost revenue per year.
Just think about that – how much time and effort would your team spend to bring that much new business through the door?
We have the answer
We have the prescription for this chronic pain – HyAlto, our revenue-focused cloud management platform.
HyAlto keeps track of all cloud service usage for each of an MSP’s customers over the entire billing period. This includes any infrastructure changes to all services and individual resources (added or subtracted). Your finance people can easily pull accurate and current usage metering reports, at any time, to feed the billing system.
This plugs your revenue leakage and yields significant savings in time and cost, all of which goes direct to your top line.