Cash flow isn’t just jargon—it’s the lifeblood of your MSP. In a recent Stride Live episode, Casey Seaborn spoke with expert Matt Kerrigan about how MSP owners can gain command over cash flow—and turn it into a growth engine.
đź’ˇ What Is MSP Cash Flow?
Matt defines cash flow as:
“The amount of cash that is generated from your operations… positive or negative” — but the goal is always to keep it positive.
In essence, you’re tracking what comes in, what goes out, and ensuring there’s always enough buffer to meet obligations.
Why 3 Months of Cash Reserves Matters
Matt recommends MSPs keep 3–4 months of operating expenses in cash. He explains:
“If that number is under one [month], …you might be worried if you can make payroll… or pay that big vendor invoice.”
This safety net offers stability during:
- Patchy revenue cycles
- Tax payments
- Emerging investment opportunities (sales headcount, marketing, etc.)
Smart Moves to Boost Cash Flow
1. Automate Customer Payments
Set up pre-authorized ACH payments for all recurring revenue. Matt notes:
“On the first of every month, you’re going to get that MRR coming in like clockwork… you don’t have to be hounding them.”
2. Use Vendor Terms Strategically
Don’t pay invoices early just because they’re available. Stretch your payables to the full term, while expecting clients to pay promptly.
3. Quarterly Cost Optimization
Avoid “cost cutting”—focus on cost optimization. Audit expenses quarterly (or immediately if costs spike). One example? An MSP paying for an underutilized physical data center—it was time to move those last few clients to the cloud and drop the overhead.
Revenue Health: MRR vs Overhead
Matt emphasizes: ensure your Recurring Revenue covers 100–110% of non-product costs. Why? Relying on project or product revenue for overhead often leads to negative cash flow during slow months.
Keep Client Agreements Profitable
Regularly ensure each client’s contract is profitable enough to bear its share of overhead. Matt suggests:
- Conduct client scope, profitability, and price reviews every six months
- Stagger quarterly reviews if you have many clients
- If a client is underperforming, either adjust scope, raise pricing, or transition them off your roster
đź› One-Hour Friday Task to Improve Cash Flow
Matt’s top pick: review client agreements and profitability. In just one hour, choose a few clients and:
- Isolate recurring revenue vs cost
- Confirm if the contract is profitable
- Decide if it qualifies for a scope or price update
Quick Recap: Your Cash Flow Checklist
- Reserve 3–4 months of operating cash
- Enable auto-pay via ACH
- Pay only on vendor terms
- Quarterly cost audits (“cost optimization”)
- Ensure MRR covers non-product overhead
- Biannual client contract and profitability reviews
Why This Matters Today
Proactive cash management isn’t nice-to-have—it’s essential. You’ll reduce stress, avoid last-minute credit scrambles, and gain freedom to invest in your business.
Ready to Take Action?
- Block out 1 hour this Friday to review client profitability
- Set up an audit routine
- Consider partnering with Stride’s advisory team for deeper support
“The best time to plant a tree was yesterday…the best time is today.”
Start growing your cash flow habits now—future you will thank you.
Inspired by Stride Live’s podcast episode “How to Manage Your MSP Business’s Cash Flow.” Listen and learn more at this post.
đź”— Related Reads
- Macro Trends of the MSP Industry
- One Big Beautiful Bill: What It Means for MSPs
- How MSPs Grow Revenue Through vCISO Solutions
Stride offers bookkeeping, tax, and advisory services tailored for MSPs—Schedule a Free Consultation to get started.
For further details or to revisit the discussions from our webinar, watch the full video by clicking the button below or contact our experts directly at Stride Services for personalized advice.
Stride Live: How to Manage Your MSP Business’s Cash Flow
This Stride Live Webinar is hosted by Stride Services. Stride is a comprehensive financial solutions provider, specializing in outsourced bookkeeping, accounting, tax, and advisory services for Managed Service Providers.
If you’re interested in being a featured guest on our Live Webinars or if there’s a subject matter expert you’d like us to interview, please let us know!
Show Notes + Transcript:
Casey Seaborn:Â Email
LinkedIn:Â Casey Seaborn
Matt Kerrigan: Email
LinkedIn: Matt Kerrigan
