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Voice Services Turning into Billing Nightmares for MSPs

Tim May on 10/19/2017

Billing issues are exactly that – issues. Every business owner across every industry has had to deal with them at one time or another. Billing issues can arise for any number of reasons; clients disputing time spent on a project, accruing overuse or unexpected charges, being double billed, etc. The list of potential issues is long, but regardless of what the issues are, they have the potential to wreak more havoc on the business and client relationship than any other.

Smart business owners plan for potential issues and create safeguards to mitigate the risk of damage to their business a billing problem might cause. Even the best planning won’t address all the issues. Many of today’s MSPs are realizing that fact as it relates to offering voice services.

The Problem

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The primary problem in a nutshell – cash flow is being constricted by voice services.

 

Many MSPs are new to offering HPBX and SIP services to their clients and aren’t familiar with historical, current, and common billing practices as it relates to providing voice services.

In the traditional model, a manufacturer’s rep would sell a phone system to a client at retail pricing. The client would pay the rep and the rep would pay the manufacturer the wholesale price. The rep kept the difference and so it would go. The manufacturer never sold directly to the end user. This allowed manufacturers to maintain tight control on distribution and pricing.

On the carrier side of things, the same manufacturer rep above might have a relationship with a carrier. The rep would recommend carrier services to the client and be paid a one-time referral commission by the carrier. In other cases the rep might receive a smaller ongoing monthly commission. The carrier would always bill the client directly, though, and take care of the rep on the back end.

Today’s Landscape

When Hosted PBX platforms like Broadvox and 8x8 entered the picture, manufacturers of traditional and IP-based systems began losing market share to cloud-based systems. As market share deteriorated, they saw the writing on the wall. They would either need to join the hosted parade or die a slow death.

The manufacturers who joined began partnering or purchasing data centers who could host their systems. Manufacturers who had only ever built phone systems were now offering voice services on their platform as a service. Manufacturers had entered the carrier space, and unlike one-time system sales, carrier services are paid for monthly.

This transition from system sales to service-based sales have left dealers and MSPs in a precarious position. The manufacturers realized pretty quickly that someone had to pay for all of those monthly services. Rather than bill the end user clients directly and send dealers and MSPs a commission, many manufacturers are requiring the MSP to bill the end user.

If you’re an MSP with a few Hosted PBX clients, getting billed from the manufacturer and floating the cash until your client pays their invoice, it’s probably not a big deal. If you’re an MSP with a few dozen clients, though, your cash can get tied up in a hurry.

Then enter the nightmare. What happens when there’s a data center outage and the service drops? What happens when a client wants to cancel ahead of their contract term expiration? What happens if phone numbers (DIDs) don’t port? What happens when the client side internet connection goes down? In short, you’re left holding the bag. You’re the one who is out of pocket while you deal with the billing dispute upstream.

A Better Way

MSPs who’ve experienced the nightmares are looking for a better way. At N2Net, we understand the billing nightmares because we’ve dealt with all of them at one time or another in our 23-year history. It’s why we bill the end user directly, handle support, and offer MSP agents monthly commissions on voice services. If you’re tired of dealing with the billing nightmares that come with selling a manufacturer’s hosted product, talk to us and learn how to eliminate that headache today!

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Topics: Voice over IP, MSP

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