Financial trends at MSPs: focus on long-term relationships
The MSP market is growing, partly because of the increase in digitalization and long-term customer contracts. According to Hylke, the key to success lies in building strong, lasting relationships: “You have to build long-term relationships so you can make money financially in the long term.” He emphasizes that having long-term customers brings stability and provides opportunities to continuously innovate. For MSPs, this means not just focusing on short-term profits, but more importantly on a long-term vision: “If you build a long-term relationship, you can have long-term contracts, which contributes to financial stability.”
Subscriptions: a smart strategy for financial balance
The move to subscription models is an important trend within MSPs. Hylke underlines that this requires an investment in the beginning and may seem like a financially unhealthy situation. He explains: “You have to invest a chunk before you get the benefits out of it.... You have partly costs before benefits.” Still, he stresses the importance of balance: expanding quickly to too many clients without proper financial planning can be detrimental. His advice: focus on valuable customer relationships and the long-term view.
The role of the CFO: more than just numbers
A good CFO within an MSP goes beyond financial reporting. It is essential to understand the business processes and link them to the financial strategy. “As a finance guy, I think it's important to understand how that goes from the bits and bytes to the product,” says Hylke. A CFO needs to understand both the cost and revenue sides, and use this data to make strategic decisions. This ensures that the profitability of the organization is maintained.
Process improvement: investing for growth
Process optimization is crucial for MSPs, according to Hylke, even if it involves initial costs. He notes, “If you have your own processes tight, you can more easily represent growth.” This means investing in tools and technologies to streamline internal processes. As a practical example, by automating processes, you reduce human error and increase efficiency, which ultimately reduces costs and increases profits.
Flexibility in teams and technology
A modern MSP must be flexible in both technology and personnel management. Hylke emphasizes the role of the finance department in supporting this flexibility: “You have to be smart and the faster you can respond to that, the faster you can also effectively deploy your team.” He recommends investing in technology that enables scalability. Make sure systems can easily scale up or down as customer needs change. This increases efficiency and reduces margins for error.
Financial planning: build a solid foundation
For a CFO, it is essential to translate complex processes into concrete financial plans that form the core for future decisions. Hylke says: “Translating the complexity back into an Excel spreadsheet is where the power of a good financial analysis lies. With it, you bring insight into what is really happening in your organization.” A solid financial foundation makes an MSP resilient against setbacks and creates room for new investments and growth.
A clear direction for MSPs
Hylke's advice emphasizes the need for an integrated financial strategy for MSPs. Understand your clients' needs, continuously improve your internal processes and maintain a sharp focus on financial health. “It's essential that you're close to the business and that you have a feel for it ... and that you regularly discuss that knowledge and insights with the people who deal with it on a daily basis.”
Want to hear more about financial strategies for MSPs? Then listen to the full episode of “Typical Joost” with Hylke Hondema for deeper insights and practical advice!
© 2023 - 2025 Joost-IT | Layout & design Matthja Grafisch Ontwerp & De Goudse Wolf
© 2023 - 2025 Joost-IT
Layout & design Matthja Grafisch Ontwerp
& De Goudse Wolf