How much cash should an MSP keep?

A managed IT provider bills most clients a fixed fee every month, so revenue is steady. The cash risk sits elsewhere. Tools and licenses are paid upfront, hardware is bought for clients before they pay, and project work often pays late.

Payroll per run, all-in $ How often you run payroll Fixed bills per month (rent, loans, insurance, software) $ Days your customers take to pay, on average days Cash in the bank today $

Minimum to keep

Two payroll runs plus one month of fixed bills

Comfortable level

Covers costs while you wait for customers to pay, plus one month

Weeks your cash covers

If no customer paid you

The starting numbers are an example. Replace them with yours.

How cash moves in an MSP

Monthly contracts make revenue predictable, which makes a forecast reliable.
Software licenses are often paid annually or monthly in advance, before clients pay you.
Hardware bought for clients ties up cash until they pay the invoice.
Project work bills in milestones and often pays slower than the monthly contract.

Why the usual rule falls short

Two MSPs each bill $90,000 a month. One resells hardware and buys it before the client pays. The other has clients buy hardware directly. The first one can see $40,000 leave the bank in one week.

How the calculator works

Result	Formula
Minimum to keep	2 × payroll per run + 1 month of fixed bills
Comfortable level	Monthly costs × (days to collect ÷ 30 + 1)
Weeks your cash covers	Cash ÷ weekly costs

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Also for MSP owners, see the MSP monthly financial report.