Trumpets, please! This is a very special episode, because it’s Frankly MSP’s one-year anniversary.
In honor of the occasion, we’re giving away some new Frankly MSP t-shirts and stickers. To snag a t-shirt, leave Frankly MSP a review on iTunes, then send an email with your iTunes handle to email@example.com.
Today on the show, I’m talking to Rayanne Buchianico is the founder and leader of ABC Solutions, a bookkeeping and accounting firm that specializes in working with MSP clients. Rayanne and I talk about financial basics for MSPs, including some tips, tricks, and rules of thumb for making sure your bookkeeping and accounting are in tip-top shape.
Rayanne is also a partner in Sell My MSP, a service that advises MSPs on preparing for a sale and connects MSPs who want to sell with interested buyers.
Richard Tubb and Karl Palachuk join us for a new live segment of What’s Going On that was recorded last week at Continuum Navigate in Boston. Richard and Karl are joined by Josh Weiss, CEO of a California-based MSP called LA Creative Technologies.
What’s Going On
[03:49] Security is very important and Continuum is all in. The vendors are offering tools to help MSPs become MSSPs.
[04:47] Compliance brings you something that you can sell.
[05:37] Major vendors are pulling tools into a stack that they now want you to buy.
[06:15] A lot of us have built businesses around our favorite tools. Now those tools may not be the primary offering of the vendors we prefer.
[07:19] Open integration could be an issue for some vendors.
[08:24] Tools not talking to each other 100% is one of the biggest challenges that MSPs face today.
[09:41] Josh had to stop using some tools once they were purchased by another vendor and stopped integrating the way they originally did. Integration is a huge problem with MSP tools.
[10:59] Getting into an ecosystem that works for you is totally great.
[11:22] When merging with another MSP, you have to build processes together and use similar tools.
[11:51] IBM Watson has an API that companies can hook into. CrushBank pools all of the information from different tools, so that it can be consolidated when MSPs change tools.
[13:37] Privacy laws and nondisclosure data could be an issue when aggregating information from different tools.
[14:48] When the cloud first began, ease of migration was a priority.
[15:28] Karl’s cloud formula includes backing up raw data back down to a local device.
[16:23] There are more more tools that allow you to backup files but not databases. This could create a problem with migration to a different tool.
[18:05] Josh is excited about new feature announcements in IT Glue.
[18:43] Karl is excited about the products in the vendor hall. There’s always new stuff at these shows.
Interview with Rayanne Buchianico: Getting Your MSP Financials Under Control[20:46] One of the problems MSPs struggle with is understanding their profits at the service level. MSPs need a better way to measure the actual cost of each contract and service so they can set their pricing accordingly.
[22:14] One of the first things you need to do is start paying closer attention to your accounting system. All of the answers are there if you know where to look.
[22:42] You need to break out the different types of income and match up your COGS—cost of goods and services—to that income.
[23:01] Make sure you’re looking at your vendor bills and matching them up to the contracts.
[23:23] Make a list of the major services you provide. This includes recurring services, non-recurring services, product sales, hosted offerings, and colocation solutions.
[24:23] Once you have your buckets built, you can place smaller groups in them. For instance, your non-recurring revenue bucket might have sub-accounts.
[24:51] Think carefully about what information goes into what bucket. Each MSP is different.
[26:00] Many MSPs struggle with cash flow challenges. Having a clean set of books is critical for managing your cash flow.
[26:48] If you pay attention to your business, you know exactly how much is coming in and how much is going out and exactly when everything is going to happen.
[28:31] If a new bank or credit cards statement comes in, and you still haven’t dealt with the previous month’s statement, you need to find somebody who can do your bookkeeping work for you.
[29:44] If people on your team haven’t been specifically trained in bookkeeping, it’s often better to outsource it to a professional. Your books and how they’re maintained can have a big impact on your business.
[30:07] Find an accounting system that works for you. Also look into automating as much as possible. Spend less time working on the books and more time working on how to use the numbers.
[31:01] You can integrate PSAs like ConnectWise and Autotask into your accounting system. QuickBooks is easy to integrate with other tools.
[32:07] ConnectBooster pulls the the invoices out of your ConnectWise or Autotask and sends the invoice to the customer. ConnectBooster will make that automatic payment for you, mark the invoices paid in your QuickBooks, and handle your accounts receivable without any intervention from you or any human.
[33:21] Bill.com also serves a similar function. There are lots of tools to choose from.
[34:00] At the end of every month, look at your financial reports. The more you pay attention to your finances, the better you will get at it.
Links from this episode
What’s Going On
- Karl Palachuk: Small Biz Thoughts
- Karl Palachuk (Twitter)
- Richard Tubb: Tubblog
- Richard Tubb (Twitter)
- Josh Weiss (LinkedIn)
- LA Creative Technologies
- ABC Solutions
- ABC Solutions on Twitter
- Sell My MSP
- Automate Your Accounting with QuickBooks Online and Integrated Apps
- Rayanne Buchianico (LinkedIn)
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