Welcome!Financial Management

Financial Management Keys to Unlock Your Business Potential

JOSH PETERSON 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

KEY 8: SERVICE DEPARTMENT GROSS PROFIT

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

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.

KEY 7: AGREEMENT GROSS PROFITABILITY

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.

KEY 6: EFFECTIVE HOURLY RATE

Dime on a Dollar

KEY 5: SALES & MARKETING BUDGET

10% of A/R

KEY 4: A/R AGING REPORT

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

DSO

KEY 3: DAYS SALES OUTSTANDING

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

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.

KEY 2: EMPLOYEE TURNOVER

KEY 1: EBITDA

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

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!

GUIDELINES FOR SUCCESS

?Q & A

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