CFO Perspectives on Liquidity and Cash Flow for MSPs

Posted on December 29, 2020 in Customer Success Stories ,Improve Financial Management ,Industry Discussion ,Q360 ,Solutions360 by

CFOs Say Cash is King! 

liquidity and cashflow for MSPsAt NSCA’s 2020 Pivot to Profit Virtual (P2Pv), Solutions360 CEO, along with three leading integration firm CFOs, offered their perspectives on understanding liquidity and cash flow for MSPs.

2020 P2Pv Session Presenters:

Brad Dempsey, CEO at Solutions360 Inc.

Eric Morris, CFO at Wayne Automatic Fire Sprinklers

Chris Mounts, CFO at AVI Systems

Dave Taccone, Executive Vice President of Finance at Spinitar

During the past year, as integration companies battled through the pandemic, it has been important for CFOs to step up and be heard. There have been tough decisions to make, requiring that all factors be meticulously considered. This is why liquidity and cash flow are such important focuses.

This 2020 P2Pv session provided attendees (regardless of financial expertise or experience) with insight to understand the impact of predictable monthly income and how to recognize that revenue properly.

In the segment below, Dave Taccone shares his insight on forecasting — specifically the impact that managed services and recurring revenue has on a company’s ability to forecast.

 

 

CFO perspectives on liquidity and cash flow for MSPS

 

Cash flow management is a topic that our CEO, Brad Dempsey, who moderates the discussion, knows well. Dempsey recently shared his wisdom, in another P2P Series article, with seven keys for accurate forecasting. Here they are again:

Elements of Accurate Cash Flow Forecasting

Solutions360’s new Q360 dashboard utilizes seven elements to create accurate cash flow forecasts:

1. Cash Receipts

The forecast allows you to use customer payment terms, average pay days, or expected payment dates if you’ve negotiated payment deferrals.

2. Overdue A/R

For invoices over 90 days old, you can increase or decrease collection periods. This allows you to see the impact of not collecting overdue accounts or collecting them over longer periods of time.

3. Payables

The forecast will use the default due date for vendor invoices or, if you have negotiated a deferred payment to a vendor, its expected pay date.

4. Project Invoicing

When projects are created in Q360, invoicing tasks and their amounts can be prescribed for very accurate forecasting of billings.

5. Project Material Planning

Within Q360 projects, the material list can be staged to indicate when equipment will be purchased. These costs are factored into the forecast within each period as planned.

6. Service Contract Invoicing

Service and managed services contracts are preset in Q360, allowing the forecast to see when monthly, quarterly, and annual invoicing take place.

7. Fixed Cost Analysis

Q360 allows you to play with fixed costs. Fixed costs are calculated based on historical periods. By default, the forecast looks back at the last three months of actual fixed costs and uses that data to project fixed costs. You can alter this to any number of months or set a percentage of fixed costs to forecast. Leaving the value at 100% will project the same fixed costs moving forward; change it to 110% to represent a 10% increase to fixed costs or set it to 80% if you are considering layoffs, for example.

 


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