What Are Common MSP Pay Terms And Billing Practices You Need To Know?

If you’re like a growing number of businesses, you may be thinking about turning to outsourced managed IT services to deal with a host of IT issues, including slow networking, cybersecurity, or even strategic IT and business planning and budgeting.

If you’ve never used an external managed IT services provider (MSP), you may have questions about what the typical payment structure is for managed IT support.

In this article, we’ll examine common MSP payment terms and billing practices. After reading this article, you’ll have a clear understanding of how MSP billing works and what to expect when it comes to paying for managed IT services.

12 Common Questions About Managed IT Payment Terms

1. How often will I be billed?

You will receive a monthly charge for the services and support spelled out in your negotiated MSP contract.

Most managed IT companies use a straightforward net-30 billing structure, so your bills are due 30 days after being sent to you. 

2. Will my monthly bill change?

Yes, the monthly cost of your MPS billing can fluctuate. While not an inclusive list, some of the reasons your monthly cost can change are:

• an increase or decrease in users/devices

• change in the licenses and/or tools to support your environment
  
  
• renewal costs
  
  
• staffing support

Your MSP will wait to get the final cost of these licenses from third-party vendors before generating your next monthly bill. 

Keep in mind that if you or the provider have any statement of work (SOW) changes, those change orders must then be approved and signed by both sides so that there is an official, written record. Those changes may also affect your monthly bills. 

3. Where can I see my contract pay terms?

The MSPs payment terms are entered into its accounting software and will be displayed on your invoice.

You’ll see the pay terms spelled out in both your MSP contract and on your monthly bills.

4. Will my monthly bills have a cost breakdown?

Yes, you should expect to see a detailed cost breakdown on your bill for the specific support you’re receiving.

5. Can I prepay?

Yes, we do allow flexible payment schedules. 

Customers can set up advanced payments on a variety of schedules, including monthly, bimonthly, quarterly, semi-annually, or annually through your financial institution.

You should receive a customer deposit invoice showing the total amount of the pre-payment. That payment will be due upon receipt so that the funds can be put into a separate deposit account and are available ahead of your next scheduled invoice due date.

6. Will I receive a discount if I prepay?

Discounts are not offered.

7. What forms of payment do you accept? 

At Kelser, we accept checks, ACH, and wire transactions. We do not accept credit card payments.

8. Will you perform a credit check?

Yes, we will perform a credit check on each new customer.

Whether or not the customer is approved for net 30 depends on the credit rating. 

At Kelser, we may also have new customers pre-pay for a period and then switch them to net 30 once they have established a good track record of on-time payments.   

9. Do you offer financing assistance?

While we are not a lender and do not offer direct financing, we can connect you with one of our financing partners if you would like to go that route.   

10. Will I receive payment reminders before my payment is due each month?

No, we do not send out automated payment reminders.

A member of our finance team will contact you directly if your payment is late.

11. Can I lock in my license costs?

No, since we simply pass along these costs from the third-party vendors, we cannot control these costs.

12. Do you offer managed IT services at an hourly rate? 

No, we do not offer an hourly rate for managed IT services. The MSP rate is primarily determined based on the number of users within your organization, along with other factors such as the network configuration and server structure.

We do offer an hourly rate for certain engagements outside of the MSP contract or specific projects. The rate is determined by the type of engineering resource required.

What Are Other Factors To Consider With MSP Billing? 

As we mentioned earlier, SOW changes have to go through the official change order process. Those changes could include adding or removing a user, adding additional software licenses, or modifying the services you want to receive.

These and other changes could result in higher or lower monthly bills, depending on what is being added or removed. 

You should also be aware that if you set up a prepayment schedule, and if any changes were made during that period, you could have a remaining balance or be owed money.

Another important consideration to keep in mind—and one that is often overlooked—is that if you’ve set up an automatic prepayment schedule with your bank, you should keep a record of any bill adjustments to ensure you send the correct, adjusted amount for your next payment.  

What’s The Bottom Line With Managed Service Provider Payments? 

Your managed IT services bill should be clear and straightforward.

Ensuring clarity and transparency in your pay terms protects both you and your provider by eliminating any ambiguity or conflicting information. 

By making sure that both parties are on the same page, this can help develop a solid foundation for a lasting partnership. 

After reading this article, you now have a better understanding of payment structures in managed IT services. You’ve also learned the answers to some common questions about MSP billing practices.

We write articles like this to provide useful information to help organizations like yours make informed IT decisions that can drive your business forward. 

If you’re curious about what you can expect to pay for managed IT support, use our pricing calculator to get an instant, no-obligation estimate.