Many MSPs are relying on existingbusiness systems and processes to manage a recurring revenuemodel that has its own distinct and increasingly complex set of rules as cloud subscriptionsbecome ever more flexible and varied.
Making your current systems work by adding manual processes to manage this complexity can be costly in a variety of ways. Here we look at the impact recurring cloud billing can have on your business, and specifically on staff efficiency and cost per invoice produced.
How Many Accountants Should ItTake to ProcessCloud Billing?
Customers want to buy differently, which means that MSPs are charging differently. Before, MSPs were managing large upfront fees for annual or multi-year contracts, enjoying the generous margins associated with managed servicesfrom software licensing.
Processinganinvoicefor an average business couldcost around$US100—normally an acceptable amountfor a quarterly or annualbill.
Then came cloud and the OpEx model, allowing customers to shift their IT spending away from larger one-off capital expenses to leasing a service in a subscription basis, incurring smaller, more variable costs.
Customersare alsobuyingan ever-wider range of cloud services, charged per transaction, per plan, compute hours, and resources used. Customers often upgrade, downgrade, renew and suspendthese services, adding further billing complexity.
Instead of one annual invoice for one large bill that has a few line items, MSPs are contending with a higher volume of lower monthly bills that can have hundreds of line items. And, because cloud usage varies from month to month, these line items and their corresponding costs can be very hard to reconcile.
Small Invoice Totals, Big Invoicing Costs
The invoice that cost US$100 to produce for onecustomer annually now multipliesby 12.The time spent deciphering complex cloud vendor reconciliation and usage files ups the invoicingcosteven further—not just in terms of labor—but because the process itself is error-prone.
Existingsystems and manual processesdon’t, therefore, work well forcloud computing and recurring SaaS services. The transition to a subscription-driven modelrequires asubscription management solution—ideally one that’s built around MSP’s specific requirements.
A quality MSP subscription billing solutioncan:
Integrate a fragmented supply chain.
Eliminate costly manual billing processes.
Maintain 100% billing accuracy.
Speed up billingsignificantly, independent of how big or fast a business grows.
Process a range of pricing models, including consumption-based billing.
Manage the sale of any product or service, including bundles.
The move to a recurring model should not mean that MSP margins are squeezed or costing staff excessive amounts of time to process. Quite the opposite—with the right strategy and a robust automation solution, cloud services are an important opportunity for MSPs to get closer to their customers and growlong-term recurring revenue.
Find out how Cloudmore can support you with cloud billing.