According to a 2022 PYMNTS report on B2B payment friction, survey respondents identified manual intervention as the leading cause of payment delays and inefficiencies.
This insight is particularly relevant for managed service providers (MSPs) who control complex financial operations involving numerous clients and varying payment schedules.
MSPs need more advanced payment solutions to keep up with a growing client base as they scale.
Antiquated payment systems with manual processes and human touchpoints introduce unnecessary errors and pose risks such as non-compliance with financial regulations and data breaches.
These outdated systems also slow down payment cycles.
FlexPoint tackles these issues head-on and provides a complete MSP payment automation platform.
This article will explore how FlexPoint creates a paradigm shift in how MSPs manage their financial operations.
As this article will demonstrate, FlexPoint automates payment & invoicing processes, leading to fewer errors and higher levels of security and compliance. It also easily integrates with the most critical MSP tools and accounting software.
By the end of this article, it will be clear why FlexPoint is the best choice for automating payment processes for MSPs.
Overview of FlexPoint’s Payment Automation Solutions
FlexPoint’s solutions reduce the need for MSPs to process payments manually.
Many MSPs work with multiple clients and bill them on different payment schedules. They have different invoicing requirements and ways of reporting on their financials.
FlexPoint’s payment automation platform offers tools to automate critical aspects of payment processing, reducing time and risk of payment error. It was built with MSPs in mind.
1. Automated Billing and Invoicing
Typically, in a managed service provider’s financial operations, most steps in the billing and invoicing process are manual and prone to human error.
Mistakes can happen during any of these steps:
- Creating the invoice
- Verifying that the services have been provided
- Applying the correct taxes
- Sending the invoice and payment request
- Receiving payment on time
- Reconciling the payments once completed
However, accurate and complete billing is integral to MSP cash flow, and mistakes in any of these steps result in significant payment delays.
Not only is it easy to make mistakes when humans handle billing and invoicing, but relying on manual effort to send the invoices on time is also a challenge.
Automating the entire billing and invoicing process from start to finish, based on the terms of predefined service agreements, accomplishes two significant things: preventing human error and saving time.
As these statistics from DocuClipper show, automated data entry can have an accuracy level of 99.959 to 99.99%.
Human or manual data entry ranges from 96% to 99%.
In some cases, this variation is inconsequential. However, a 3.99% difference is significant in terms of MSP payments.
For example, if your business processes 600 payments a year, there’s a 3.99% error rate due to manual invoicing, which means approximately 24 invoices could have errors.
These errors could include incorrect service details, misapplied taxes, or wrong payment amounts, leading to payment disputes, delayed payments, or even lost revenue.
Each payment error costs you money; you must identify, correct, and reissue the invoice. This delays the payment, affects cash flow, and can strain client relationships.
FlexPoint allows the MSP to create an invoice template to fit a client’s needs regarding the tax rate, service tier, payment terms, and so forth. The invoice generated will reflect only the services provided, reducing the risk of disputes.
Alternatively, if the MSP creates the invoice using their PSA (ConnectWise, SuperOps) or Accounting software (QuickBooks Online, QuickBooks Desktop, Xero), FlexPoint ensures that the data is always synced across all platforms.
This is important because payment disputes can be incredibly costly for MSPs.
In 2023, US consumers disputed an estimated $65 billion in credit card charges, with the average cost of a dispute rising by 16%.
According to estimates by Mastercard, each dispute also carries an additional cost of $15 to $70 per dispute, paid by the card-issuing bank and the merchant.
Automating invoice generation for the MSP’s financial health means no invoices are missed or delayed. This speeds up the payment cycle and thus allows for better cash flow management.
2. AutoPay and Automated Collections
One of the biggest challenges for MSPs is collecting client payments on time.
Clients on subscription models who pay manually can forget or neglect to pay on time. This can cause issues with cash flow and client relationships and require more time and resources to chase down payments.
FlexPoint’s AutoPay functionality is a powerful asset. Clients can set up recurring payments automatically processed on an agreed-upon schedule.
With AutoPay, MSPs may avoid this step entirely. The AutoPay system will follow up on late payments with reminders and send upcoming payment reminders to reduce the chances of late payments.
FlexPoint’s AutoPay system is set up to accept payments via credit cards, ACH transfers, and other electronic payment systems. This flexibility allows clients to select the payment method that suits them best, ultimately increasing the chances of payment.
With AutoPay, collections can be configured to take different actions based on predefined conditions.
For example, it can be set to only charge invoices based on the invoice cost and if it includes specific terms.
If a client is overdue for payment, FlexPoint can automatically send a reminder email, apply late charges, or escalate the issue as necessary.
This can alleviate the strain on MSPs, who must manually handle overdue accounts and ensure collections processes are handled promptly and consistently.
3. Automated Reconciliation
Payment reconciliation is also one of MSPs' most time-consuming and error-prone processes. This process typically involves matching the payments received with the corresponding invoices and ensuring all financial records are correct.
Manual reconciliation processes are slow and error-prone, making discrepancies challenging to rectify.
As explained above, the error rate of manual data entry is statistically significant compared to automated data entry.
According to Rynoh, using automated systems rather than manual work reduces the time spent on payment reconciliation by 95%.
FlexPoint eliminates manual reconciliation by automating the process and reducing time and errors.
By continuously scanning incoming payments and matching them against invoices, FlexPoint keeps your records current and minimizes the chance of a bank transfer going unnoticed.
The automated reconciliation process links with other MSP and finance management tools, including accounting and PSA software, so financial information is consistent across platforms.
This reduces the time MSPs spend manually entering data and leaves less room for error.
MSP Automated Reconciliation Case Study: IT Vortex
Take the example of IT Vortex, a New Jersey-based cloud migration and information technology (IT) service provider. IT Vortex chose FlexPoint to smooth cash flow and remove manual invoicing and reconciliation.
Before FlexPoint, IT Vortex clients had to leave the IT Vortex site and pay elsewhere. Understandably, this confused clients, who often paid late.
With FlexPoint, IT Vortex clients can quickly pay through a passwordless portal with the AutoPay feature. Thanks to FlexPoint's integration capabilities, payments are also automatically reconciled and entered in QuickBooks.
As a result of this significant reduction in payment friction, IT Vortex saw:
- Payment cycles became 2x to 30x faster.
- Savings of $15,000 per month on invoice processing.
- Savings of 60 hours per year on manual invoicing.
4. Real-Time Tracking
With payment systems that only deliver daily or weekly information, MSPs are forced to make decisions based on outdated and inaccurate data.
MSPs need real-time visibility into financial operations to make rapid business decisions.
FlexPoint provides real-time tracking functionality so that MSPs can see their entire financial ecosystem anytime.
Then, they can quickly ascertain:
- Where money is coming in as payments are processed
- What invoices are outstanding
- What the current cash flow looks like
This complete picture empowers MSPs to act quickly when problems arise, such as late payments or unusual receivables.
Real-time tracking also bolsters financial reporting, with up-to-the-minute data that can be used to create real-time financial reports. This ensures timely reporting of revenue, expenses, cash flow, and other metrics.
With real-time insights into financial operations, FlexPoint equips MSPs with the data needed to make decisions that strengthen their financial health.
Example: The Impact of Real-Time Payment Tracking
To demonstrate the power of real-time payment tracking, we’ve created a detailed example showing its ripple effect across an MSP’s entire operations.
This MSP manages multiple client accounts with different payment schedules.
Typically, payments are due at various times throughout the month, with some clients paying on the 1st, others on the 15th, and so on.
Without real-time tracking, the MSP is reduced to weekly, perhaps monthly, updates about payments that have cleared and those that are still outstanding.
This delay results in missed opportunities to follow up on late payments and inaccurate cash flow projections.
Now, consider what would happen if the MSP starts using FlexPoint’s real-time tracking.
On the second of the month, the MSP finds out via the dashboard that a large payment wasn’t received on the first.
Since the MSP sees this right away, it can immediately send a reminder to the client or call to discuss why the payment has not been made and what can be done to get the business back on track.
They can even leverage automated reminders to late-paying clients to make this less labor-intensive.
As a result of this quick action, the client processes the payment on the third, preventing the late payment from impacting the MSP’s cash flow or financial planning.
This also spares the MSP from depositing into reserve funds or relying on short-term credit to cover urgent expenses.
The MSP uses the real-time tracking feature on the same day to review cash flow and forecast upcoming expenses.
They noticed another client’s payment, due in five days, might not cover an upcoming large vendor payment due on the same day.
With this insight, the MSP can plan to adjust its resources, perhaps by deferring non-essential expenses or negotiating a short-term extension with the vendor. This helps them mitigate the risk of inadequate cash flow.
In this scenario, FlexPoint’s real-time tracking functionality helps the MSP accomplish three overarching goals:
- Maintain a stable financial position
- Optimize resource allocation
- Avoid the costs associated with late payments and inadequate cash flow
When combined with other FlexPoint features, including AutoPay and automated reconciliation, real-time tracking puts MSPs one step ahead. They can mitigate the financial risks of late payments and cash flow shortfalls.
5. Flexible Financing
FlexPoint’s working capital tools offer MSPs access to capital, allowing them to grow quickly without waiting for or being constrained by operating revenue alone.
This financing option is ideal for MSPs who require more capital to meet short-term expenses, add employees, or invest in high-tech solutions.
For instance, if an MSP wants to ramp up services to meet client demands, FlexPoint’s working capital solution will cover the upfront cost.
This funding allows MSPs to tackle bigger projects or acquire critical equipment in advance without waiting for cash flow to accrue.
FlexPoint’s flexible financing solutions also include one-click financing for your MSP clients. Some clients are reluctant to adopt new services because of the upfront cost, especially when the new service involves expensive technology.
Suppose your client needs to upgrade a server but is unwilling to do so due to cash constraints. In this case, you can increase your clients’ purchasing power by offering FlexLine payment schedules, which amortize the costs over time.
This feature helps your clients proceed with more significant transactions, helping increase MSP profits while offering high-value services to clients.
6. Robust and Flexible Payment Options
FlexPoint’s flexible payment options, from credit cards to ACH transfers, are designed to meet every client's preference. This variety helps you lower transaction fees and provide an effortless, flexible payment experience.
ACH payments tend to have lower fees (they average $0.20 and $1.50 per transaction for a flat fee) than credit cards (they have an average fee of 1.5% and 4% of the transaction value).
FlexPoint charges a flat rate of $0.25 per ACH transaction, making it a cost-effective option for MSPs.
This makes ACH transfers an economical payment method for recurring payments your clients will appreciate.
This is an especially valuable ACH service for MSPs with long-term client relationships or subscription-based services, as it cuts processing costs and makes monthly payments predictable and affordable.
FlexPoint also has credit card surcharging functionality. This feature allows MSPs to offset credit card processing costs by shifting the costs to the client where appropriate.
Again, card processing charges can vary from 1.15% to 4% per transaction and add up quickly.
To offset these costs, MSPs can include a small fee on each transaction. Clients are notified of the surcharge in advance, which is a clear and equitable way to deal with credit card bills.
These flexible payment options allow clients to pay as they like – via ACH for lower costs or by credit card for convenience – while the MSP has more control over how fees influence their business.
This adaptability offers MSPs and clients a seamless, customizable payment process tailored to cost savings, payment speed, and user-friendliness.
Integration Capabilities of FlexPoint with MSP Tools
A typical managed service provider relies on a portfolio of tools and platforms to manage their business, and having a payment solution that integrates with these various tools is a must.
According to data from a survey of IT decision-makers, lacking this technology costs businesses an average of half a million dollars annually.
As such, integration technology is precious to most businesses, including MSPs.
One of the most attractive features of FlexPoint’s integration capabilities is it allows MSPs to build a single workflow from which to operate. This workflow achieves greater data integrity, financial management, and operational process efficiencies.
Next, we’ll explore FlexPoint’s integration capabilities.
1. ConnectWise Integration
ConnectWise is among MSPs' most-used professional service automation (PSA) tools for service delivery, customer relationships, and financial reporting.
However, service delivery and financial operations touch all parts of the business, and managing your two most important financial functions in isolation invites redundancy and mistakes.
FlexPoint’s ConnectWise integration removes that threat by capturing all financial data on both platforms.
An invoice is generated when service is provided and documented in ConnectWise, and then it is auto-populated in FlexPoint.
Once the client pays the invoice, FlexPoint reconciles the payment against the invoice and updates the financials in both ConnectWise and the accounting software.
It allows the latest financial data to be spread between platforms in real time.
Therefore, the financial information the MSP provides is more accurate, and financial reporting is enhanced with a holistic view of the MSP’s financial information.
Connecting with ConnectWise, FlexPoint helps MSPs spend less time on accounting and more time providing superior client service.
2. Integration with QuickBooks & Xero
Many MSPs use accounting programs such as QuickBooks (Desktop and Online) and Xero to carry out their accounting work.
These programs provide comprehensive, high-level accounting functionality. With them, MSPs can manage their business's finances and expenses, make payments, receive client payments, and produce invoices, receipts, or other financial reports.
Nonetheless, even with these programs integrated into their payment processing system, MSPs will still need to manually determine whether all financial data is correct and consistent.
However, FlexPoint’s strategic integrations with QuickBooks and Xero solve this by automatically syncing all financial data across platforms simultaneously.
If you send an invoice from FlexPoint to a client, it will show up on QuickBooks or Xero in real-time—everything is in sync.
FlexPoint’s integrations with QuickBooks and Xero give MSPs a single payment platform to manage their financials, improve data integrity, streamline operations, and reduce reporting time.
Case Study: SkyCamp Technologies
One MSP, SkyCamp Technologies in Columbus, Ohio, was challenged by managing multiple payment processing platforms. Although its credit card invoicing platform had an ACH service, it was not optimized for MSPs.
SkyCamp's next best option was QuickBooks ACH, but it lacked full integration with its invoicing platform.
These manual processes created inefficiencies in billing operations.
With FlexPoint, SkyCamp could consolidate payment processing on one platform, automate billings and payments, and sync with QuickBooks.
It eliminated the need for manual processing, resulted in fewer errors, and saved SkyCamp eight hours of work each month.
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