Why Recurring Revenue is Valuable

For MSPs, recurring revenue is the bread and butter of your business. It’s what keeps the lights on and the business running. It’s what has attracted so much investment by private equity firms into the market. However, if your clients are consistently paying their invoices late, then that recurring revenue may not be so recurring after all.

Recurring revenue is the foundation of any successful MSP. Unlike other types of service businesses, managed service providers have contracts that provide a predictable and consistent source of revenue, at least in theory. Recurring revenue is supposed to allow MSPs to plan and budget for the future, invest in growth and have visibility into the long-term health of the business.

Recurring revenue is also high on the list when it comes time for a possible exit. Buyers are looking for businesses with predictable revenue streams, and a larger percentage of recurring revenue means a potentially higher valuation.

Is Your MSP's Recurring Revenue Actually Recurring?

While it’s obvious that recurring revenue is valuable, it’s not truly recurring if your clients are consistently paying their invoices late. Late payments can create cash flow problems for your MSP and eliminate all of the perceived benefits of recurring revenue. Your revenue is no longer predictable. Even though you know how much you are supposed to get paid, how much you actually get paid every month is a whole different story.

Make Your Recurring Revenue, Recurring

When it comes to ensuring that your recurring revenue is actually recurring, the easiest way to accomplish this is by requiring all of your managed service clients to be on autopay. Autopay is a payment method that allows your clients to automatically pay their invoices every month and reduces your accounts receivables aging. By having all of your clients on autopay, you make it convenient and hassle-free for your clients to pay - making your recurring revenue actually recurring.

How FlexPoint Can Help

FlexPoint is a payments platform built specifically for MSPs and the recurring nature of MSP billing. FlexPoint makes it easy to get your clients on autopay and automate your recurring billing, while offering your clients a range of payment options including credit cards and ACH. Schedule a demo to learn more about how FlexPoint can make your recurring revenue actually recurring.