Managing Your Finances as an MSP: Top Tips

If you’re struggling to administer your Managed Service Provider business, in terms of growth and/or building bulletproof financial security – relax! You’re not alone!

Attaining stability, or even just financial confidence to make your day-to-day business dealings worry-free, is often something that you alone cannot do; because being a financial expert – on top of all your other tasks – is too much for one MSP business owner to manage.

You need some support.

Do MSPs Need an Accountant?

If you’re a busy MSP owner trying to run your business, keep your clients happy, navigate the ever-changing economy, and still find time for a good night’s sleep, the idea of then setting aside time to look at your cash flow forecast, expand your growth, calculate good financial decisions for the future, and so on, probably feels a little overwhelming.

It can be easy to pawn all these tasks off onto an accountant, who probably has a better idea of your company’s financial health, and can certainly take some of the weight off of your shoulders. But before you do this, there are a couple of things to consider.

Keep in mind that accountancy isn’t synonymous with business consultancy, and most accountants aren’t in a position to impart pearls of wisdom as to how to manage your business’s monetary health to the extent you may need.

Is Bookkeeping Enough?

The short answer is no, bookkeeping isn’t enough to provide a clear image of how your business is performing.

Why?

Typically, a bookkeeper’s role isn’t to provide insights on financial health; their role predominantly is to keep a log of the data surrounding business transactions, invoices, and so on, which doesn’t provide the discernment needed to see how the business is performing, month-by-month, which is the key to managing good decision-making and maintaining good financial health.

It also bypasses crucial points, such as managing supplier issues, debt handling (if this is a factor), unbudgeted tax and/or VAT, or potential opportunities the business shouldn’t miss out on.

Because of this, even an experienced bookkeeper may struggle to provide an accurate forecast of the business’s financial position. Also, there is no additional pair of eyes going over the bookkeeper’s works to check for accuracy, which, in the long-run, can negatively impact the business’s wellbeing.

So, what options are available to cover all bases?

Top 8 Tips for Managing Your Finances as an MSP

Without further ado, let’s look at some of the best advice an MSP can take on to ensure his/her business is growing at the rate it should:

#1. Use an Accredited Bookkeeper

It can be tempting to ask a number-savvy friend or relative to do your books for you – resist this urge! It may seem like the more cost-effective option, but in the long-run, it isn’t. Always hire a qualified bookkeeper who belongs to an accredited body.

Failure to do this may cause avoidable errors that may come at a hefty price.

#2. Do Your Research

This means not settling for the first bookkeeper you come across. Quiz all prospective bookkeepers, and make sure they will keep track of your company’s month-end process to better navigate how your business is performing.

#3. Look into Additional Services

Some accountancy services offer additional support – particularly for MSPs and small & medium enterprises/sole traders. This can provide invaluable advice you just wouldn’t get with a bookkeeping service alone.

#4. Look into SLAs

A service-level agreement can be crucial for providing the support you need all year round. This can ensure uninterrupted attention to your finances when your bookkeeper is on-leave, etc.

#5. Get What You Need

Before you agree to additional financial services, ensure they are going to provide documentation that outlines how they plan on managing your finances, as well as monitoring your key performance indicators (KPIs) on a monthly basis to help you compare them with your forecast.

#6. Software Compatibility

It can be wise to check with your accountant to ensure they’re familiar with any professional services automation (PSA) software you may use, and are able to configure it accordingly.

#7. Look into Auditing

Using a service that provides external audits can act as a useful second set of eyes to make sure everything is running accordingly, in regards to your cash flow and all other financial endeavours.

#8. Consider an All-in-One Service

For full peace-of-mind, why not look into using a service that prioritises:

• Tax advice
• Training
• Year-end accounts preparation & submission
• Process sales, purchase & general ledgers.
• Bank reconciliation
• VAT
• Payroll
• Account management

This will cover all of the tedium and head-scratching that comes with the admin side of bookkeeping, as well as offering priceless advice on your accounts and figures.

Unlike many accounting and bookkeeping companies, a bespoke service is tailored to your individual business’s needs. They will also maintain regular contact with you to provide the specialist understanding required to offer full-bodied advice and support your business needs to survive and thrive!