MSPs are exceptionally skilled at solving complex technology challenges and building sophisticated systems for their clients. Paul McCann, founder and CEO of Red Earth CPA, has developed a powerful solution: the finance flywheel—a five-component system that creates self-reinforcing momentum in your financial operations.
“What we really want to do is we want to get to a point where everything is documented, it’s very clear,” McCann explains. The flywheel concept builds momentum through integrated systems that compound over time, eventually running without constant intervention.
This systematic approach addresses a common opportunity for MSPs. As McCann observed during a recent webinar, “Some of the brightest people out there are in this industry. They’re really smart, and they understand how everything works. And sometimes, some of them are so focused on their clients and so focused on getting the technology correct, that they don’t apply the same skill sets to their back office as they would apply to their clients.”
Component 1: Clean, real-time data integration
The foundation of McCann’s flywheel begins with clean, real-time financial data. This means your PSA must connect seamlessly with your accounting system, bank feeds should be automated, and payroll should flow directly into your general ledger.
“You gotta have your PSA connected into your accounting file. They have to be able to talk,” McCann emphasizes. “If there’s an invoice that’s raised on your PSA, it’s gotta be talking into your QuickBooks file. You have to have a source of truth.”
The research supports this foundation. Gartner reports that finance departments can save 25,000 hours annually through robotic process automation, with 88% of corporate controllers planning RPA implementation. When your financial data flows automatically between systems, you eliminate the manual reconciliation work that consumes valuable time and introduces errors.
Real-time data becomes especially critical for MSPs managing complex recurring revenue models. Without integrated systems, you’re flying blind—making decisions based on outdated information while competitors gain advantages from current insights.
Component 2: Predictable accounts receivable collection
McCann’s second component transforms AR collection from a reactive scramble to a predictable, automated process. This directly addresses one of the biggest pain points in MSP financial management: cash flow inconsistency.
“You are asking people to pay your company money, and there’s special set of attention and stress that is involved in getting invoices out,” McCann notes. The stress level around AR collection differs significantly from other financial processes because it directly impacts your ability to operate.
During the webinar, McCann shared compelling data: “MSPs that have payment clients that pay by check are getting paid on average 34 days after the invoice is sent out.” In contrast, automated payment solutions can reduce this to just 6 days—a dramatic improvement that transforms cash flow predictability.
The impact is immediate. When you know exactly when payments will arrive, you can plan investments, manage payroll confidently, and avoid the stress of wondering whether you’ll make payroll next month. This predictability becomes your competitive advantage—you focus on growth rather than survival.
Component 3: Standardized chart of accounts and KPI dashboards
The third component leverages industry-standard financial structures to unlock comparative insights and operational efficiency. McCann advocates for standardized approaches that enable true apples-to-apples comparisons.
“You want to use a standardized language so that you’re apples to apples communication,” McCann explains. “All of the work has been done by people who’ve been in this industry for long, spent their lifetime in this. It is called the Normalized Solution Provider chart of accounts.”
Standardization enables powerful dashboards that provide instant visibility into your business performance. One of McCann’s clients saved four hours monthly after implementing standardized reporting processes. “We’re going to be able to see all of the information pertinent to the company, both financial and non-financial, in one location,” he notes.
These dashboards become your business intelligence center, showing not just where you’ve been, but where you’re heading. When you can click a button and see all relevant KPIs instantly, decision-making accelerates and improves dramatically.
Component 4: Monthly close discipline and business continuity
McCann’s fourth component establishes the operational rigor that separates thriving MSPs from those merely surviving. This involves structured monthly close processes, comprehensive checklists, and disciplined financial hygiene.
“Nothing happens without a checklist,” McCann emphasizes. “Your finance department needs to be on a checklist as well. It just isn’t just your technicians who need to be on a checklist.” The goal is creating a business that operates regardless of who shows up on any given day.
“You want to get your company to a flywheel so that wheel can turn regardless of who is in your company,” McCann explains. This business continuity aspect becomes crucial as you scale and need systems that don’t depend on any single person.
The monthly close discipline also provides early warning systems for potential problems. Instead of discovering issues months later during tax preparation, you identify and address them while they’re still manageable. This proactive approach prevents small problems from becoming business-threatening crises.
Component 5: Forward-looking planning and budgeting
The final component transforms MSPs from reactive service providers to strategic business partners through budgeting, forecasting, and scenario planning. This forward-looking capability builds on the foundation created by the previous four components.
“If you haven’t done the other four, if you haven’t gotten the layered foundation of your company to work, you really can’t add this next one on the forward looking planning,” McCann cautions. The sequence matters—you need clean data, predictable collections, standardized reporting, and disciplined processes before meaningful planning becomes possible.
Forward-looking planning enables MSPs to leverage their predictable revenue streams for strategic advantage. When combined with scenario planning, you can prepare for multiple future states, improving your ability to navigate market changes and capitalize on opportunities.
This capability becomes especially powerful for MSPs transitioning from project-based to recurring revenue models. With proper planning systems in place, you can confidently invest in growth initiatives, knowing you have the financial visibility to manage risks effectively.
How the components work together
Here’s the thing: each element strengthens the others, creating compound benefits that accelerate over time.
Think about it: clean data enables accurate reporting, which drives better decisions, which improves cash flow, which funds technology investments, which generates cleaner data.
The cycle accelerates with each turn. “Once the flywheel is spinning,” McCann notes, describing how the momentum builds naturally once all components work together.
From technical expert to business owner
McCann’s flywheel addresses a fundamental challenge facing MSP owners: the transition from technical expert to business leader. “We have to be able to transition from the superhero cape wearing technician into the business owning,” he explains.
The webinar title—”Build a Business That Doesn’t Need Saving”—captures this perfectly. Instead of constantly firefighting financial crises, the flywheel creates systems that prevent problems before they occur.
“Your accounting should be boring,” McCann notes. “When you put something in a routine area that is a recurring calendar invite or a recurring meeting, you are strategically moving that out of your amygdala and into a different area of your brain. You’re much clearer in thought.”
Implementation roadmap
The research validates the growing importance of financial operational excellence in the MSP space. The global managed services market is estimated to grow from USD 365.33 billion in 2024 to USD 511.03 billion by 2029, making financial operational excellence a key differentiator in an increasingly competitive landscape.
MSPs ready to build their finance flywheel should approach implementation systematically:
Start with data hygiene: Implement PSA-to-accounting integration and automated bank feeds to establish the foundation. This creates the clean data necessary for all subsequent components.
Automate AR processes: Deploy payment automation tools that accelerate collection and improve cash flow predictability. This component often delivers the most immediate ROI.
Adopt industry standards: Implement standardized chart of accounts and reporting structures for benchmarking and operational insights. This enables meaningful performance comparisons and strategic planning.
Establish monthly discipline: Create structured close processes that reduce errors and accelerate decision-making. This operational rigor prevents small issues from becoming major problems.
Embrace forward planning: Develop budgets and forecasts that align with the predictability of recurring revenue models. This strategic capability enables confident growth investments.
For MSPs who recognize the value of this systematic approach but need guidance implementing it, Paul McCann and his team at Red Earth CPA specialize in helping MSPs build these exact systems. Having worked exclusively with managed service providers for years, they understand the unique financial challenges MSPs face and can accelerate your flywheel implementation significantly.
Why this matters now
McCann’s framework arrives at the perfect time for the MSP industry. As the market approaches $511 billion, financial operational excellence becomes essential for sustainable growth and staying competitive.
The choice facing MSP owners is clear: continue operating reactively, constantly putting out financial fires, or implement systematic approaches that create sustainable competitive advantages. McCann’s finance flywheel provides a proven framework for making this transition.
“We want to make accounting boring again,” McCann jokes. But behind the humor lies a serious strategic point: when your financial operations run smoothly and predictably, you can focus your energy and creativity on serving clients and growing your business.
Why AR automation amplifies the other four components
While McCann’s framework begins with clean data integration as the technical foundation, accounts receivable automation serves as the financial catalyst that transforms the entire system from aspirational to achievable. Here’s why Component 2 amplifies every other component’s effectiveness:
Clean data becomes actionable intelligence. Component 1’s real-time data integration provides the technical foundation, but without predictable AR processes, that data reveals problems you can’t afford to fix. When payments arrive unpredictably (McCann’s 34-day variance), you have perfect visibility into cash flow problems but lack the financial stability to address root causes systematically.
KPIs become management tools rather than report cards. Component 3’s standardized reporting and dashboards require stable cash flow data to be truly useful. When AR automation eliminates McCann’s 28-day payment variance (34 days to 6 days), your KPIs shift from reactive scorecards to predictive management tools that enable confident decision-making.
Monthly close becomes routine rather than crisis management. Component 4’s disciplined processes depend on eliminating the “special set of attention and stress” McCann described around AR. Automated AR removes the biggest variable in monthly close timing, transforming it from a stressful scramble into a predictable business rhythm.
Forward planning becomes strategic rather than hopeful. Component 5’s budgeting and forecasting capabilities require cash flow certainty to be meaningful. How do you commit to investments or growth initiatives when collection timing varies by weeks? Automated AR provides the financial predictability that makes strategic planning possible rather than purely aspirational.
The strategic insight: while clean data provides the technical foundation for McCann’s flywheel, AR automation provides the financial stability that makes systematic implementation of all five components feasible rather than episodic. Without predictable cash flow, MSPs remain trapped implementing improvements only when they can afford them, rather than systematically building the operational excellence that drives sustainable growth.
Where to start with your flywheel
While McCann’s five-component framework requires systematic implementation, the logical starting point becomes clear when you understand how AR automation amplifies everything else. The transformation from 34-day payment cycles to 6-day cycles that McCann referenced creates the financial foundation necessary for implementing the remaining components.
The stress McCann described around AR collection—“that special set of attention and stress that is involved in getting invoices out”—represents more than operational pain. It’s the constraint that keeps MSPs trapped in reactive mode, unable to invest in the systematic improvements that drive sustainable growth.
This is exactly the kind of thinking we bake into Alternative Payments. Rather than treating payment collection as an isolated process, we’ve designed AR automation that creates the predictable cash flow foundation McCann’s entire framework depends on. When your collections become reliable, implementing clean data integration, standardized reporting, disciplined monthly close, and forward planning transforms from aspirational goals into achievable next steps.
McCann’s flywheel effect begins with momentum. For MSPs serious about systematic financial transformation, that first push comes from solving the foundational constraint—see how Alternative Payments turns unpredictable accounts receivable into your most reliable competitive advantage.
The flywheel framework transforms MSPs from businesses that need constant saving into businesses that generate their own momentum. By implementing each component systematically and allowing them to reinforce each other, MSPs create the operational foundation necessary for sustainable success in an increasingly competitive market.
The flywheel awaits. The only question is when you’ll start building yours.
