This article is written by Brad Gross, who is founder and president of the Law Office of Bradley Gross, P.A., a business technology law firm.
The new year is almost here, and as an attorney who works with MSPs every single day, I’m giving you a gift you won’t get anywhere else: a frank look at three key problems that are quietly draining your profits, exposing your business to risk, and keeping attorneys like me far too busy. Fix these now, and 2026 becomes the year you finally run your MSP on your terms. You’re welcome.
Problem 1: Your Accounts Receivable Are Too High
There is an epidemic of high A/R in the MSP industry, which is causing many providers to either shut down or accept unfavorable merger and acquisition deals at prices below market value just to resolve their debts. Let’s stop the madness. If you have clients with A/R of 60 days or longer, you need to change the way you bill before high A/R kills your company.
The Fix: Imitate How Lawyers Bill
Law firms collect retainer fees to ensure full and timely payment, avoiding unacceptably high A/R. If you’re thinking, “Well, retainers work for lawyers and other professionals but not for MSPs,” then hear this: You ARE a professional—an IT professional. But you’re still billing like an amateur, and that’s fostering high A/R and unacceptable levels of risk.
Consider a situation where your customer prematurely and improperly terminates its agreement with your company, sticking you with thousands of dollars in Microsoft NCE fees, and licensing fees from Datto, Pax8, or Cisco. Sound familiar? You’re stuck with two equally bad choices: You can pursue expensive litigation or walk away and eat the hard costs.
Now let’s change the paradigm to include a retainer, collected up front, that covers your hard costs and some (if not all) of your fees. Sound better? So act like the professional you are. Collect your customers’ first and last months’ payments up front and hold those fees against the last payments in the project or service. Collect a retainer deposit of all hard costs up front and then apply those costs on a monthly basis instead of invoicing your customers for those costs (and praying they pay on time).
If your customer pushes back, do what lawyers do: Stand firm. Explain to your customer that retainer fees help ensure license fees are paid in a timely manner and, further, allow your company to leverage volume discounts, which saves them money.
Problem 2: You’re Not Explaining What You Do, and It’s Devaluing Your Business
Regardless of how educated your customers may be, they do not understand what you do, how you do it, or the value you bring to the table. And why should they? They are not IT professionals and they have no idea how difficult it is to maintain a safe and secure IT environment. That’s why they have you!
But uninformed MSP customers have unrealistic expectations that cost you time and money.
- Uninformed customers demand to receive out-of-scope services and completely fail to understand why the services were out-of-scope to begin with. Then, to satisfy those customers, you’ll start doing free work.
- Uninformed customers will claim your services are deficient because, from their perspective, the services failed to deliver (unrealistic) results.
- Uninformed customers don’t value your efforts and, consequently, will demand you cut your fees if they see someone, somewhere, offering similar services for a few bucks less.
Ultimately, these customers will try to terminate your agreements prematurely and stick you with unmitigable license fees and costs. Over the long term, the effort expended by dealing with uninformed customers who have unrealistic expectations takes up your time, kills your margins, and costs you money.
The Fix: Create a User’s Guide
Manufacturers have relied on user guides for a hundred years (or more) to help manage their customers’ expectations, reducing the need for customer support and fostering better business relationships. So if the strategy works for manufacturers, don’t you think it could work for you too?
Make it your mission to create a services guide for your company and start managing your customers’ expectations. Tell your customers what your services are expected to do, define relevant service limitations and timelines, and explain what you, as the MSP, require of your customers to help ensure the services are delivered efficiently and effectively. Write frankly and comprehensively about how service-related issues will be managed, from intake through resolution. Consider the predictable points of friction that occur between your customers and you and address them in the guide.
Managing your customers’ expectations by giving them more information will keep disputes and lawyers’ fees to a minimum—and that will directly benefit your company’s bottom line.
For some examples of service guide entries, go to MSPAssistance.com.
Problem 3: Your Agreement Implementation Stinks
You might have the greatest master services agreement (MSA) in the world, but if you fail to implement it correctly, it may be unenforceable when you need it most. Do you only require your customers to accept your agreement “sometimes” but not all the time? Are you unsure what document version(s) your customers are accepting? Are your salespeople modifying your MSA without your knowledge? Do you subscribe to a service where your MSA is updated and then forced on your customers regardless of the importance of those changes? If any of these apply to how you do business, then you need to change how you do business.
The Fix: Follow These Tips
- Every service-related transaction between your customer and you, whether it’s the sale of a product, a license, or facilitation of a managed service, must be memorialized in a statement of work or similar document, each of which must clearly and unambiguously reference your MSA. There should be no question as to whether your MSA applies in any given situation because, in fact, it should apply to every situation. No exceptions.
- Designate one person in your organization whose approval must be sought before your MSA can be changed or circumvented, and make sure you enforce that policy company-wide.
- Understand this: You cannot unilaterally change the material terms of your MSA without your customers’ consent or, alternatively, giving them advance notice of the changes with the option to terminate your MSA without further liability. If you’re forcing changes on your customers under the (misguided) concept that they agreed to that paradigm and/or that they have to “check back from time to time to determine what changes have been made,” you may be operating under an unenforceable agreement. If your MSA is written correctly, it does not need to be updated more than once every few years. A good rule of thumb is every three years. So get it right the first time and sleep more soundly knowing that your MSA will be enforceable in every situation.
Let’s make 2026 the year you overcome the problems plaguing your business, earn more money, face fewer problems, and finally run your MSP on your terms.
RELATED: The Top 5 Contract Mistakes MSPs Make That Put Their Business At Risk
