MSP Billing: Manual vs. Automated
In the early days, MSP businesses used a fairly simple pricing model called the break-fix pricing model.
In which a client could have a support engineer available on call when something “broke,” and only had to pay for the time the engineer spent on the resolution (and for any materials used).
But fast-forward to now: there are SO MANY ways managed service providers charge for their services.
Per device billing, per user billing, tiered billing, consumption-based billing, value-based billing, flat rate billing, à la carte billing — you name it!
Obviously, as pricing models get more complex, so do the billing needs of an MSP business.
But it’s not just the pricing models that pose a challenge to fast and timely billing.
The many factors they depend on — for example, the accurate tracking of the time spent on each client, the updated information about the billable work from the devices being supported (via RMM reports and more), etc. — also need to be accounted for.
Processing all this service data manually is challenging for many reasons. Let’s see what makes manual billing complicated for MSPs and how automated billing is the optimal way.
A typical billing scenario in an MSP business
Let’s take an example.
So suppose you do consumption-based billing. Which means your customers pay you according to the amount of services used, for e.g. workstation support used per user.
And let’s say you have a Client X for whom you support 100 desktops and 10 servers.
This Client X also takes a bunch of monthly add-on services from you such as a backup service (billed per machine) and an antivirus service (billed per server).
Let’s also assume that you use an RMM solution. Which means, often you’ve the RMM updating Client X’s machines and routinely logging the time/resources used for the job.
This client also happens to raise at least 3-4 tickets each month that need your engineer to offer on site services.
Here’s how manual billing would work in this scenario…
Okay, now let’s see how billing Client X manually looks like at the billing time of the month:
So first, you need to calculate the costs of the backup and anti-virus services offered to the client during the month.
Next, you need to export your RMM reports to see what billable work has happened via it during the billable period.
Finally, you need to log into your ticketing solution and see what time was spent on all the clients’ tickets for the month.
With information about all the billable work in your hands, you now need to add them up and forward it for billing purposes.
A lot of work, isn’t it?
Now, imagine doing this each month for tens of clients.
This manual billing ritual isn’t just time-consuming because you have to pull data about the billable work from multiple sources, but it’s error-prone as well.
For instance, if you don’t use automated time-tracking, your technicians could lose some precious billable time. Heck, you could also forget including the RMM entries for a bunch of devices and lose money there. You might even miss entering the details about the add-on services.
After all, just how much can you keep track of manually?
Now, here’s how the same billing would work with automation
First and foremost, you would just set up this Client X inside your MSP PSA solution and list all the services they’ve subscribed to as simple sales items.
This would cover any kind of customized or addon services like the backup and antivirus services from this example.
Next, you would integrate your PSA solution with your RMM tool, and your PSA solution would automatically sync the quantity of service (for example, the number of workstations on a site) in a customer contract (in this case, for Client X) with your RMM.
Also, your PSA solution would read the time spent on the tickets for the client all through the month and add those up as well. (Not just that, an advanced PSA solution like Computicate also comes with automated ticket time tracking. Which means, ticket time gets automatically logged as soon as an engineer picks up a ticket.)
Your PSA solution would also register any expenses/costs incurred for dispensing the services to the client.
After summing up all the entries, your PSA would then let you run your invoices and export them to your accounting software for accounting purposes.
All of this within MINUTES.
And absolutely error-free.
Also, a PSA solution can automatically update the billable amount if the number of agents changes. For example, if you added another 10 workstations for Client X, your PSA would be able to read that and update the billing quantity data based on the new number of devices being served.
Wrapping it up …
As you can understand, automated billing will save you many hours and errors each month.
But it’s not just about the logistics and freeing up your team from the administrative work of manual billing, automating billing also ensures that your invoicing happens on time, so you can maintain a better cash flow.
Not just that, once you bring your together your critical MSP servicing and billing data via an intelligent PSA, you can easily run reports to identify your highest-paying and most profitable clients.
If you’re looking for a PSA solution that can truly automate your billing (do everything from the above and more!), check out Computicate. Built by MSP owners just like you, Computicate lets you create invoices within minutes, and with full accuracy. Book a demo here.