8 critical financial benchmarks to improve profitability for managed service providers and any service industry. KPIs that are easily understood by CEO's and front line staff

1. Welcome!

2. Keys to Unlock Your Business Potential

3.  CEO of Bering McKinley
 Engage with our clients through
 Direct one on one consulting
 Peer Teams
 Workshops
 Management Consulting to 1000’s IT Solution
Providers over the last 10 years.
 Provide training on all aspects of running an IT
Firm
• Accounting
• Service Delivery
• Sales
• Sales Management
• PSA Implementation
• Over 500 ConnectWise deployments
Founding Partner
of Bering McKinley

4. 55% Service Department Gross Profitability
 Manage service salary expense to 33% of service revenue
and you’re almost there!
 Include all Service Revenue, no product sales.
 Manage other service expenses
 RMM tools
 PSA tools
 Cell phone
 Mileage

5. Agreement Gross Profitability
Demand that your PSA provides this report for you and
that it is accurate.
The VERY BEST Service Managers LIVE AND DIE by
this report. The very best review this report weekly. It
is used to set budgets and manage pricing.

6. Three Methods to Calculate EHR:
 If your Effective Hourly Rate is not greater than your Hourly Rate
then you have a problem. You're selling your agreements too
low, you're putting too much time into your agreements, you're
not remediating problems before turning up clients, or all of the
above. My top MSP's have effective hourly rates double that of
their rack rates. The rest are struggling to get to 80% of their
rack rate.

7. Dime on a Dollar

8.  10% of A/R
 Tells us that your clients do not respect your services.
Over 90 days tells me you don’t respect your services
 15 day terms
 Send statements every month
 Make collection phone calls

9.  DSO
 More importantly, how closely does DSO match your
payment terms?
 Here's the calculation: (Accounts Receivable/Total Credit
Sales)
X Number of Days in period measured.
 Do this quarterly and pay attention to how this affects
number 4.
 Cash flow is king; insist that your clients adhere to your
payment terms

10. Here's the calculation. You can do this
on an annual basis, or quarterly basis,
you can even look longer term if you're
a really small company.

11.  Net Operating Profit – this is the
PROFIT from the OPERATIONS of your
company. This has nothing to do with
how much money is in your pocket
 10% Target Is MINIMUM

12.  Evaluate financials in Accrual Mode, File taxes in Cash Mode
 No wives, husbands, dads, moms, sisters, cousins, brothers, uncles,
aunts, god parents, second cousins twice removed doing the books!
 Weekly financial meeting with bookkeeper; sign checks,
confirm deposits, collection calls to be made, bank balances.
 Invoicing occurs three times a month; twice for T & M, once
for recurring
 We send billing statements once a month.
• No excuses
 Monthly P & L and Balance Sheet Meeting.
• “I always look at my P & L” means nothing.
 We download transactions from our banks and credit cards…
• It’s 2015! No hand entering!