How MSPs Can Improve Client Relationships by Personalizing Payment Solutions

Grandview Research predicts the global managed services market size will grow at a compound annual growth rate (CAGR) of 13.6% from 2023 to 2030. 

Considering the estimated $299.01 billion market value in 2023, the revenue forecast will be $731.08 billion by 2030.

This growth demonstrates the industry's competitiveness. So, MSPs must differentiate themselves in this growing market by offering better ways to work with and support clients. 

A single factor that can play a significant role in these relationships is MSP payment solutions. 

As the data will show, customizing payment solutions increases client satisfaction and builds long-term business relationships.

This article will discuss why it’s important for MSPs to customize payment solutions and how those solutions benefit clients and MSPs. The article will also demonstrate practical steps MSPs can take to improve their clients’ experience using custom payments.

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The Importance of Personalizing Payment Solutions in MSPs

Personalized payment solutions for MSPs entail flexible billing and payment policies tailored to different client profiles rather than offering a one-size-fits-all solution.

According to data from B2B BNPL specialist Two, businesses that offer multiple-payment arrangements find that buyers spend an average of 20% to 40% more. 

However, this is just one reason personalized payment solutions benefit clients and MSPs alike. 

Here are eight more benefits of personalizing client payment solutions.

1. Client Retention and Satisfaction:

Personalized payment systems help secure long-term loyalty; this is essential because client retention is more cost-effective than acquiring new clients.

Consider these findings about client retention to highlight why it’s an important metric to focus on:

• Outbound Engine reports that acquiring a new client costs five times more than keeping an existing client. 
• An Invesp study also found that the chances of selling to an existing client are 60-70% versus just 5-20% for new prospects.
• According to research from Harvard Business School, even a 5% client retention increase can increase profits by 25-95%. 

Clients who see their MSP is willing to create payment structures that fit their unique financial needs are likelier to stay with this provider. 

Alternatively, if a provider does not offer suitable payment options, they are more likely to look elsewhere. 

In fact, according to estimates from Allianz, between 30-50% of B2B buyers have abandoned orders at checkout because their preferred payment options weren’t available. 

A traditional, fixed monthly plan might not make sense for some business models. This is especially true if the income fluctuates significantly during the year. 

If you offer this client the flexibility to adjust payments based on revenue cycles, you demonstrate your commitment to client satisfaction. 

In return, you are rewarded with higher client retention rates. 

2. Operational Efficiency:

Time spent chasing late payments and dealing with cash flow crises reduces operational efficiency. 

Rather than growing the business or serving clients, MSPs are left handling burdensome administrative tasks.

This is another reason personalizing payment solutions is essential. MSPs can boost cash flow using automated payment tools to send reminders, calculate late fees, and track payments.

When clients are given flexible payment options that align with their cash flow, the likelihood of missed or delayed payments decreases.

These customized payment strategies reduce time wasted chasing overdue payments, interruptions in the revenue stream, and the need to devote extra attention to administrative workload.

3. Adaptability to Client Growth:

As clients evolve, so too do their financial needs and payment capacities. Custom payment solutions for MSPs ensure the MSP’s payment methods can change along with them.

Ultimately, flexibility is the only way to support the client’s development without disrupting payments.

For example, a startup that begins with relatively simple IT support services might eventually need advanced cybersecurity handled by its MSP. 

In this scenario, the original payment terms might no longer fit the complexity of the company’s finances. 

By providing a payment term that scales to support the client’s business growth, the MSP can continue to meet their needs without causing financial strain.

Take another tech company that scales to the point where it prefers being billed every quarter rather than monthly. Adjusting the billing frequency to the client’s revenue cadence signals that the MSP is responsive to the client’s evolving needs.

4. Risk Management:

MSPs can structure payment terms according to each client's financial health and payment history. 

This tactic helps mitigate the risk of late payments, especially with new clients or those with fluctuating revenue streams.

For instance, an MSP may offer a payment plan that requires a partial upfront payment for clients with a history of late payments. 

This reduces the default risk while still offering the client some flexibility. 

Conversely, clients with consistent payment histories might be granted more lenient terms, such as delayed payments or extended due dates.

5. Market Differentiation:

As evidenced in the beginning of this article, the MSP market is increasingly saturated. 

This growth will be primarily driven by the need for niche services in cloud management, cybersecurity, and managed networks.

As daunting as the crowded field can seem, there are ways to stand out. 

One of the most significant advantages of providing tailored payment solutions is that it allows an MSP to differentiate itself.

As organizations increasingly seek partners who understand their unique operational and financial needs, a service-oriented MSP that provides billing structures tailored to its clients is an obvious choice. 

For example, a healthcare-centric MSP might tailor its payment plans to suit typical healthcare revenue cycles. These cycles often have lag times because the claims process for reimbursement from insurers can take months. 

If an MSP can align its billing cycles with the healthcare model, it can improve its clients' cash flow management. 

Alternatively, an MSP that serves seasonal industries, such as retail or accounting, could provide flexible payment plans that allow clients to make larger payments during peak holiday months or post-tax season and smaller payments during the off-season.

In these instances, the MSP does more than just provide a service. It’s becoming an ally that anticipates and responds to the client’s needs beyond technical support. 

6. Improved Financial Planning:

If payment plans are customized to each client’s financial capacity, then financial

planning improves for the MSP and the client. 

The MSP can plan cash flow more predictably, and the client can plan expenses to complement their revenue streams. 

For example, a rapidly growing eCommerce company might see revenues peak during the holiday season and then slow down in the months following. 

When MSPs structure payments to reflect this reality – with higher payments in the busy season and smaller payments in the off-season – they can help keep clients afloat.

Likewise, knowing when larger payments will come in for the MSP helps them plan more effectively and avoid cash flow issues.

Any steps to minimize cash flow issues are worth taking — according to the U.S. Chamber of Commerce, 82% of small businesses fail due to insufficient cash flow. 

7. Reduction of Late Payments:

Late payments are a reality for most MSPs, as they are for most businesses.

Recent data from a Creditor Watch survey shows that over 80% of businesses are impacted by late payments. 

The effects of these late payments are far-reaching.

For example, data from QuickBooks reports that 65% of businesses spend an average of 14 hours per week completing administrative tasks related to collecting payments.

Late payments also impact cash flow, which is the lifeblood of an MSP. 

A Balance report found that nearly 68% of companies that receive over half of their payments later deal with cash flow problems.

Without adequate cash flow, 27.5% of companies will also pay suppliers late. 

When you customize your payment solutions for clients, you can often prevent late payments before they happen. 

For example, offering clients more flexible payment terms makes it easier to manage their expense outflows within their revenue cycles, reducing the likelihood of delays.

8. Contract Flexibility:

Flexibility in the contract itself is also a way to keep payment terms relevant and functional over time as the client’s business changes. 

Contracts that include a periodic review of payment terms give both the MSP and the client greater confidence in the arrangement's sustainability.

Several factors that could impact a client's ideal payment terms can be covered during these reviews.

Examples include:

• Growth in the client’s business
• Shifts in the market for its product or service
• Changes in the client’s financial position

For instance, an MSP could agree to revisit payment terms in six months. This would allow the agreement to be revised to reflect the client's current circumstances, reducing the likelihood of future client payment disputes.

8 Proven Strategies for Personalizing Payment Solutions for MSP Clients

Having discussed why it’s important for MSPs to personalize payment solutions for clients, we will now move on to strategies for implementing these customized solutions. 

Fully personalizing payment solutions means obtaining a full picture of a client’s financial situation and creating a payment system as a direct response to that situation.

Here are eight actionable steps MSPs can take to develop personalized payment solutions for clients:

1. Client Financial Assessments:

Before offering customized payment terms, MSPs must get a firm grasp of each client’s finances. 

This includes reviewing the client’s: 

• Payment history
• Revenue patterns
• Cash flow cycles

Understanding a client’s financial health allows MSPs to develop flexible and sustainable payment plans.

For example, a restaurant client may have slow months in the winter and good months in the summer. 

Adjusting a payment schedule to match this seasonal variation can help the client budget more efficiently for the relevant period. It also enables you to avoid late payments or service cancellations.

1. Usage-Based Pricing Models:

Usage-based pricing can be an effective means of personalizing your payment solutions. It charges the client only for the amount of service they consume (rather than a flat fee).

While it aligns costs more closely with client consumption and value, usage-based pricing needs robust monitoring to record usage correctly. 

Done right, it can lead to longer-term loyalty as clients see the accurate correlation between the services they’re using and the bills they’re receiving. 

However, the MSP also has to consider its own operational costs.

MSPs must assess and potentially adjust pricing models to reflect high-demand periods, which could increase operational costs.

Second, usage-based pricing can add uncertainty to revenue, making it harder to plan financially. 

A dynamic billing platform can mitigate this risk if you plan to implement usage-based pricing.

This allows MSPs to automate the invoicing process based on client-specific criteria.

These criteria include:

• Service usage
• Billing cycles
• Payment terms

Dynamic billing platforms automatically generate invoices, adjust for variations in service usage, and send reminders when payments are due.

2. Consultative Sales Approach:

MSPs can also adopt a consultative approach to better understand their clients' financial preferences during sales. 

Client conversations help you offer more relevant, personalized payment options.

During these conversations, you might cover topics like:

• Business goals
• Revenue patterns
• Financial constraints 

For instance, during a quarterly review meeting, an MSP might discuss the client's financial outlook for the following year. 

Then, they can suggest adjusting the billing structure to match expected growth or seasonal revenue fluctuations. 

This proactive approach prevents future payment problems and strengthens the relationship by demonstrating the MSP’s commitment to the client’s success. 

3. Customizable Payment Portals:

A user-friendly, branded, and customizable MSP payment portal allows clients to: 

• Select from various payment methods.
• Set up recurring payments.
• View their billing history.

It provides a more tailor-made, convenient payment experience.

This experience includes giving your clients more control over payments and minimizing frustration when processing and managing their finances.

For IT Vortex, a New Jersey-based cloud migration and IT service provider, FlexPoint’s passwordless payment portal significantly reduced payment friction. 

Before partnering with FlexPoint, IT Vortex clients had to navigate out of the IT Vortex site and pay elsewhere. Not surprisingly, this confused clients, who were prone to paying late.

With FlexPoint, IT Vortex clients can now pay online in a passwordless portal, while the integration with QuickBooks also automates payment reconciliation.

In turn, IT Vortex has seen the following results:

• Payment cycles that are 2x to 30x faster
• Saving $15,000 per month on invoice processing
• Saving 60 hours per year on manual invoicing

3. Automated Payment Reminders and Incentives:

Automated payment reminders can produce an impressive increase in on-time payments. 

An MSP can easily set up automated reminders with MSP-specific payment automation software so clients receive advance payment notices.

If you want to take it a step further, offer incentives to those who pay early with a slight discount.

For instance, an MSP may send a client a reminder five days before an invoice is due, saying that a 2% discount is offered for payments made in the next two days. 

Early payment incentives tend to encourage clients to pay early, which helps the MSP get paid sooner and gives the client a discount.

According to data from PayStand, companies that offer early payment discounts see a 15% reduction in their average days payable outstanding (DPO).

6. Escrow Services for Large Projects:

MSPs need working capital for all the dozens or hundreds of daily expenditures that keep an MSP functioning. 

For example:

• Operating expenses
• Accounts payable
• Employee compensation
• Payroll taxes
• Marketing and advertising costs

Escrow services—where funds for a larger, longer-term project are held in a third-party account and released only after a milestone—can provide this working capital and protect both sides’ interests.

These arrangements assure the MSP of financing while the client maintains confidence their funds are being managed responsibly.

7. Transparent Reporting Tools:

Transparency is fundamental in building a successful MSP-client relationship.

MSPs can achieve this transparency with real-time billing updates. 

This up-to-date information lets clients proactively monitor their accounts and receive advance notice of forthcoming payments. 

Suppose a client expects a $5,700 bill this month but sees an upcoming charge of $6,000 when they log into their payment portal. 

Rather than attempting to collect that payment only to have it declined or disputed, the client can immediately address the payment discrepancy before you attempt to process it.

This preemptive communication prevents misunderstandings and mitigates the risk of late fees or the costs of failed payments.

In addition to billing issues, chargebacks—where clients contest charges with their banks—can be costly. According to Verifi data, they tend to result in fees for MSPs of $20 to $100 per transaction. 

Real-time data and clients’ easy access to their account information expedite the billing process, enhance trust, and reduce unnecessary chargeback costs.

SkyCamp Technologies experienced these benefits firsthand after enlisting FlexPoint’s help to complete a billing operations overhaul.

SkyCamp, an MSP in Columbus, Ohio, had been struggling with payment processing across several platforms. 

After partnering with FlexPoint, SkyCamp utilizes a consolidated billing platform.

Now, SkyCamp clients can view all current and past invoices and payment activity in one place, ensuring ultimate billing transparency. 

The results have been tremendous: SkyCamp recorded a 30% decrease in late payments and a 20% increase in AutoPay usage.

By automating month-end reconciliation and providing a passwordless payment portal, SkyCamp also saved eight hours per month.

8. Flexible Contract and Payment Terms:

Contracts with flexible payment schedules, financing options, and billing cycles create a foundation for personalized payment solutions. 

MSPs allow clients to alter payment terms periodically, as justified by revenue or expenditure shifts, ensuring the partnership remains supportive, flexible, and reliable.

Installment plans can significantly increase sales and expand your client base by making large purchases more accessible.  

For example, your client might want to upgrade to a high-capacity cloud storage system but hesitate because of the price. 

Offering flexible financing eases their worries by allowing them to divide the payment into smaller chunks, reducing the financial threshold for upgrades.

Similarly, consider a startup retail customer whose business is booming and needs more advanced POS systems to scale up to meet a new wave of customers. 

With a few clicks, they can get financing and install more POS systems without depleting their cash reserves. This way, your clients and your business can grow quickly, increasing your revenue in the process.

Clicklease data reports that offering B2B customers flexible financing can increase average order values by more than 41%. 

This demonstrates why flexible payment plans are integral in maximizing client acquisition and transaction sizes.

For Veteran-owned MSP Loud & Clear, offering clients flexible payment terms increased their ability to work with enterprise-level clients and sped up invoice settlement times. 

Upon partnering with FlexPoint, Loud & Clear dramatically improved their cash flow management. 

FlexPoint enabled Loud & Clear to offer customers flexible payment terms, automate payments, and provide predictable, consistent cash flow.

This resulted in: 

• 400% revenue growth in under a year
• Five times faster payment processing
• Thousands saved in fees and interest

With these flexible financing tools, Loud & Clear could confidently bid for more significant contracts, including enterprise-level clients, and dramatically increase annual revenue.

Conclusion: Enhancing MSP Success Through Customized Payment Options

As the MSP market continues its rapid growth rate in the coming years, these increasingly customized approaches will be vital for MSPs intent on building long-term, relationship-based client interactions. 

One such MSP is Net-Tech Consulting, a Texas-based company delivering IT management services nationwide.

Net-Tech’s President, Zachary Kinder, spent roughly 60 hours yearly on invoicing and collections.

Along with needing that time back to spend on business growth, Net-Tech faced two other notable challenges:

• Inconsistent Cash Flow: Client cheques sometimes arrive months late, leaving Zachary to chase these payments down.
• High Processing Fees: The transaction fees associated with processing payments were exorbitant—most platforms charged 1% on ACH transfers.

These factors underscored the need for a solution to streamline cash flow and tailor payment options to client preferences.

Enter FlexPoint. 

Upon partnering with FlexPoint, Net-Tech clients immediately began using AutoPay and ACH, lessening the burden on Net-Tech’s accounting department. 

This resulted in:

• Faster Invoicing: Automation reduces Net-Tech’s invoicing time by 80%.
• Faster Payments: On average, clients pay significantly 20 days earlier, giving Net-Tech a reliable cash flow and minimizing revenue gaps.
• Saving on ACH Fees: With clients switching from credit cards to ACH, Net-Tech incurs lower credit card fees.

Net-Tech also benefits from FlexPoint’s customized and responsive support. 

The FlexPoint team continues to optimize the platform for Net-Tech’s exact requirements.

These benefits have had a transformative effect on Net-Tech's cash flow and client satisfaction.

Proven, personalized payment solutions can help MSPs achieve higher customer satisfaction, retention, and operational efficiency. 

A flexible payment structure reinforces the perception that the MSP understands its client’s unique needs while providing greater budgetary stability and fewer late payments.

Transform your MSP's payment systems with FlexPoint’s advanced solutions. 

Customize your payment processes to meet your clients' needs better and boost your operational success. 

Visit our website or contact us to discover how we can help you personalize your payment solutions effectively.

Additional FAQs: Personalizing Client Payment Solutions for MSPs

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