Episode 03: Get Paid Faster FT. Ryan Goodman of Connect Booster
In this episode, Host Kevin Clune talks with the President of Connect Booster, Ryan Goodman, about how automating collections can increase cash flow and allow your Managed IT Company to operate leaner than ever.
How MSPs Get Paid Faster
Want to see how you can automate your invoicing and collection process? Say goodbye to time-consuming accounting tasks, stressful collections calls, and an aging A/R that just won’t quit. Get a free Connect Booster demo now.
Kevin: “What’s up everybody? This is Kevin Clune. Welcome to The Lean MSP, where we look to take on the challenges of operating in MSP in today’s economic landscape. That means staying lean, working smarter and doing more with fewer resources.
In this episode, I want to talk about automating collections. While our MSP was never up against
a financial situation like the one presently, we had a major wake-up call when we realized how much money we had out on the street and we desperately needed a way to go get it.
Our first instinct as MSPs was to build a payment portal that would push and pull data
from our PSA and accounting software. We basically wanted to just solve this problem with technology. We wanted to make paying us as simple as humanly possible for our customers.
So five months in and thousands of dollars in development costs, we eventually just bailed on the project when we discovered a tool called Connect Booster. If you’re unfamiliar, this company had exactly what we were trying to build and for us it was just a no-brainer. The product was able to do exactly what we needed and honestly it changed the financial picture of our business entirely.
With me today I have the President of Connect Booster, Ryan Goodman. How’s it going Ryan?”
Ryan: “Good, how are you Kevin?”
Kevin: “Good, good. Thanks for coming on. So as you probably know a lot of MSPs are struggling to receive payments from their customers right now. And a lot of them don’t have the ability to sit around and just wait for a check to show up.
So this hits on the overarching purpose of Connect Booster and its value prop. So what can these MSPs do right now to get paid faster?”
How To Get Paid Faster
Ryan: “First things first, I think a lot of service-based businesses when starting out don’t realize how many unintended walls they put in front of their customer to actually give them money. So sit and think about that. Do you have the ability as a business owner to be paid 24/7/365 without someone from your office interacting with a person or a system? That’s step number one.
If that’s something that you don’t have, the ability to do the to take money inside of your business 24/7/365 without a person interacting with another person. You have a huge wall between their bank account and your bank account. And you’ve already provided services most of the time. I see that as a huge problem.
The ability to accept online payments. The ability for people to view invoices. Not only delivered electronically, but then be able to review them post-delivery anytime. They want again 24/7/365 and then be able to push a payment against those invoices without needing to get on the phone or write a check or you know, just talk to someone or interact with someone in general is a big deal.
So that is just Kevin, in-general basic business practice. Now, I think I want to shift a little bit to our current situation which is COVID. One of the things that we’re seeing, the trend is people are concerned about cash. Just cash in general. Cash flow.
The ability to accept a credit card right now in this environment is huge. Yes. I understand. There are fees associated with accepting credit cards, but you are allowing your customer to self-finance without taking cash out of their bank account. They get to preserve their cash.
You’ve essentially extended financing to them on a line of credit that they have already established for themselves against their business, and you are getting your money and all of a sudden that fee becomes nominal compared to not having cash in your bank.And that customer absolutely not wanting to separate with any amount of balance in their bank account. Big, big deal.”
Getting Customers To Adopt Autopay
Kevin: “I know once we got up and running with Connect Booster, our biggest challenge was getting our customers to break their routine, and finally adapt to it. That being said, everyone has had to change their routine lately. So it seems like this is the perfect time to implement something like this.
So what approach do you recommend for MSPs to get their customers to change the way that they pay?”
Ryan: Well, I think anytime that you are implementing a change with a client, you need to approach it from a what’s in it for them type of stance. Because we all understand the benefits for us inside of our business. We want to get paid faster. We’ve got to get paid easier and improve our cash flow. But approaching it right now around the self-financing piece like we had talked in the first question.That’s a that’s a big deal.
If we’re stepping outside of the pandemic right now. You really need to have a why around it. So for example, the ability to offer the absolute best service at the absolute lowest price, that requires efficiency inside of your business, right? Because if you’re staff-heavy on collections or accounting because you have a receivables issues, as Business Owners, we don’t just absorb that.
Ultimately we end up figuring out how to pass it through to an end customer. The leaner that you can be through automation and that automation through tools and software that doesn’t require human labor ultimately of allows us to offer the best service at the lowest price. When you’re making a change, specifically around money, visibility and transparency are huge.
And so when we talk about 24/7/365 access to the ability to view invoices, you need to show them the path that you’re not necessarily taking away control by asking them to pay another way. You’re creating efficiency and you’re actually creating more visibility and transparency than they ever had with you as a Service Provider or Vendor.”
Speed-To-Pay When Automating
Kevin: “You’re absolutely right. For us, it was all about helping our customers see it that way. And understanding that this was in their best interest as well. Clearly speed-to-pay is the largest benefit here for the MSP when it comes to using Connect Booster. So I’m sure you have a ton of data on this.
So how much faster can MSPs expect to receive payments when they automate?”
Ryan: “So we hear stories all the time where you took my receivables from 60 days down to 20 days. A big part of that is what we call auto-pay, but the ability to get paid automatically for services that are issued on a monthly recurring basis is huge.
There’s expectation set around that, but to give you some real hard data. What we had done early on. Very early on in the development of Connect Booster, and when we boarded our first hundred customers, you know, we were getting a lot of that. Just direct feedback on an individual account level.
But what we then did is we went in and we actually looked at the data on those first hundred accounts. We said what was the average time that they got paid prior to Connect Booster?
And it was 48 days beyond the due date. So think about that. If they had included their net term, on their invoice, right? Because if you have net 30, the invoice isn’t past due till day 31. So 48 days beyond what that buffer of the net terms so that could have been 78 days. It could be 58 days, but it was 48 days beyond the net term that was the average prior to Connect Booster.
We tracked them for a whole year. There were even receivables days that went negative because people were paying their invoices before they were due (on project type invoices).
Because of access to the portal that number went down to 1.4 days, which is incredible. So you talked about the access to cash inside of your business. I always find it funny, you know people say, “I’ve got receivables, that’s an asset on my balance sheet.” I have never been been able to pay anything with receivables on my balance sheet. The only thing that’s worked is credit or cash in my bank account.
So getting that cash for services you’ve already provided from customer’s account to your account is absolutely paramount. I consider cash flow inside a business like your blood inside of your body. Things do not go well if it is not flowing and present. That’s the result.”
Kevin: “No, you’re totally right. One of your vendors is not going to accept an IOU from one of your Customers right?”
Ryan: “It’s like Dumb and Dumber, you know, ”250,000 might want to hang on to that one.”
Kevin: “Absolutely.” [laughs]
Clip: “That’s as good as money sir. Those are IOUs.”
Improving Automatic Collection Results
Kevin: “For those MSPs that may already be automating either with Connect Booster or another system, how can they improve their results?
So for example, how often should they be sending reminders, past-due notifications, etc?”
Ryan: “I am a huge fan of inside the first 30 days, lots of reminders. Because that is when you are most likely, statistically to collect the money. When it’s one day beyond the due date, I like to have an automated workflow that goes out and lets people know, ”Hey just want to let you know this is past due.”
And then seven days 15 days and then 30 days. So that’s four notifications inside of the first 30 days. The reason being, once receivables start going beyond the 31 to 60 days past due, you have a 13 percent chance of not collecting. 61-90, about a 35% chance of not collecting. Past 90 days, you have a 60% chance of not collecting that dollar amount.
You know, those are big aggregated statistics and obviously our business should be very relational but the fact of the matter is it’s just unneeded risk and you’ve got to be able to set expectations.”
Benefits Of A Centralized Portal
Kevin: “Yeah. I know we were very bullish with the notifications and we almost got to the point where customers would complain a little bit they received too many aggressive notifications for past-due invoices and things like that. But what I always said was “Well, there’s one way to get rid of these. It’s to pay your invoice on time.” When people did pay their invoice on time, they didn’t really receive any notifications, other than one’s letting them know that the invoice was available.
Another cool feature that we used in Connect Booster was the ad widget. We would run ads all the time to drive awareness around products and services that we wanted to up-sell to our customers. This was the perfect audience because we knew that the people that were looking at our payment portal were financially decision makers of the company.
So what are some of the other benefits of using a centralized payment portal like Connect Booster?”
Ryan: “You know, why are people afraid to get on board with autopay? They’re worried about losing control. And they’re worried about when something goes wrong, how do I stop it? Well, if you give them access all of a sudden those fears go away. And now you’ve got automatic payment set up for your customer.
The benefit of offering the customer portal is being able to deliver upon those concepts. I mean, there are ways to configure inside of this stuff where you could actually allow your client to cancel an auto-pay contract right inside of the portal.
Now that’s going to send you a notification. It allows you to address issues sooner. One of the reasons that people don’t pay is because they’re mad about something and now they don’t call you for 60 days and you’re the one reaching out.
If you have an automatic notification that lets you know, basically in the moment at the point-of-sale that they’ve canceled some auto-pay and now you can deal with that issue faster before they have lumped three or four other potential vendors that don’t even relate to you on top of their frustration. Right? The fact that you can address these issues is better for your receivables and better for your relationship. So again, a payment portal helps facilitate that.
And then there are other things like ticketing integrations that you know, we’ve developed or other products have developed to core PSA systems, right, in a “one-stop-shop” for people. You know, we’re always working on single sign-on integrations where you know, people don’t want to have to be logging out to multiple portals to do stuff, right?
So solutions like Invarosoft, Desk Director. One big one lately was the Connectwise customer portal and our single sign-on with them. I mean that just becomes a full-service suite. Here’s a prompt. Come on Datto Autotask & Kaseya we want to do the same thing with you! That offers so much value to your clients. Let’s get this thing done Because people love the ability to have cliche “single-pane-of-glass” but it’s true. I don’t want their customers to be going around and they don’t want to be logging into all these things.
We need to be working together as a group of vendors that offer value to our mutual clients to make it as easy as possible for our partners and their end-clients to be able to access the data that they want around the services that we all provide.”
Getting Started With Automation
Kevin: “Yeah, it definitely seems like these type of integrations and “single pane-of-glass” is just a win/win/win across the channel. Thanks for your time today Ryan.
Why don’t you tell everybody what they can do if they’re interested in using Connect Booster to automate their collections.”
Ryan: “You can always reach out to us here. Our website is www.connectbooster.com. Our phone number is 877.733.6584 Two primary emails that are monitored by a bunch of us: [email protected] and [email protected]. And of course, if you reach out to us via our website, there are plenty of places in contact forms to fill out your information in one of my staff or myself will reach out to you directly and answer questions and figure out ways to help you get that cash flowing and into your business consistently without a hitch.”
Kevin: “For all the MSPs that are listening that are having problems with cash flow, I’ve been there. I know the pain and I can honestly tell you that automation is one of the best solutions.
When we talk about staying lean, these are the type of solutions that allow companies to operate this way. Our partnership with Connect Booster was a game changer and was really instrumental in getting our financials in order before the company was eventually acquired.
That’s all for episode 3. Thank you all for listening and I hope you have a great week.”