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Whether you’re already operating as a VAR and looking to transition to the world of MSP, or you’re just setting up your business and wondering which is better, a thorough understanding of these two acronyms is going to help you out. Both VAR and MSP businesses operate in the business and technology services industries but refer to different types of businesses and business models. This article is going to take a closer look at both VAR and MSP to help you determine which business model is right for you. Take a look now to learn more. VAR Vs. MSP: The Basics 🧑‍💻 Even if you’re already operating as a VAR, you may find that the MSP acronym leaves much to be imagined. It can be difficult to get your head around what both these business models actually entail and how they work when put into action. Below is a basic overview of both VARs and MSPs to help you fully understand what each business type entails. What Is VAR? Source: LinkedIn VARs, or Value-Added Resellers, are businesses within the business services industry that resell tech products, like software, to other businesses. Rather than just being a middle-man, though, these businesses add value to the products before selling them, often including services like customization, integration, and support. VARs focus primarily on sales and selling the tangible products that they stock. They make most of their month through the resale of products, and additional revenue comes from the value-added services that they provide. VARs can be on-site and cloud-based businesses and often aid both large enterprises and SMEs. VARs are attractive to clients looking for a one-stop experience, i.e., if they have an extensive project and need lots of different software products, they could go to a VAR to ensure all their needs are met in one simple transaction. What Is MSP? An MSP, or a Managed Service Provider, is a business that provides ongoing and proactive management of a company’s IT, infrastructure, or end-user systems. Services MSPs offer can vary but may include network monitoring, security, data backup, customer support, and more. When compared with VARs, MSPs are much more service-oriented. While a VAR looks to sell a product, an MSP offers support to its clients. MSPs often aim to nurture a good relationship with their clients and support them with various services to ensure the smooth running of the company’s operations. The MSP model is most often subscription-based, meaning that MSP businesses make their money by charging a recurring fee. This makes for a more predictable revenue stream when compared to the way VARs make their money. Pros and Cons of VARs 🧐 The VAR model comes with both pros and cons, which you should consider when deciding between the two. Pros of VARs 😃 Flexibility: VARs can adapt easily to changes in current market trends, meaning they can supply the products people want and need. Diverse revenue streams: VARs can stock a wide range of third-party products, which means there are lots of different methods of income. Customization: The whole VAR model relies on the fact that the company adds features or services to already existing products. This means that they can create the exact products or services businesses need, no matter whether they’re working with a large enterprise or a small business. Cons of VARs 😬 Competitive market: The VAR market is a highly saturated field, which means that VARs are always facing steep competition from others in the industry. Market dependency: When businesses cut spending during times of economic downturn, most often, it is VARs that suffer. This reduction in demand can lead to a drop in revenue. Margins: Due to the saturation of the market, VARs are under constant pressure to ensure their profit margins remain competitive. This could add pressure to pricing and negotiations with clients. Supplier dependency: VARs are completely dependent on the availability of products from other suppliers, which means that their inventory is subject to outside fluctuations. Pros and Cons of MSPs 🤔 MSPs tend to have more pros than the VAR business model, which we have detailed below. Pros of MSPs 🥳 Recurring revenue stream: One of the major pros of the MSP model is that you have a consistent revenue stream from subscription fees paid to you by your clients 💰. Scalability: The MSP model can grow with their clients, so as the business gets bigger, your services can match their needs. Expertise: MSPs can often be highly specialized in the information technology sector. This could mean specializing in data management or cloud services. Specialization gives you a niche to target and an edge over the competition. Proactive maintenance: The MSP model means you proactively maintain a system for your clients. This can save them time and money, as well as reduce downtime when something goes wrong. Cons of MSPs Intensive customer relationships: Client satisfaction is absolutely crucial to MSPs, so client relationships need to remain strong. Security: Because MSPs are dealing with sensitive client data, their security systems need to be robust. MSPs are often the target of cybercriminals. Client education: Sometimes, MSPs will need to educate their clients on why the services they provide are worthwhile. This might include educating them on the long-term benefits of IT management rather than relying on the break-fix model. Income: VARs Vs. MSPs 💸 If you’re looking to start a VAR or MSP business or transition from one model to the other, you’re likely interested in the kind of money you can be making. VARs and MSPs have different revenue streams, and because of this, they often have different annual incomes. We’ve detailed the differences below. VARs Income VARs make most of their money through third-party product sales. This means that income can fluctuate depending on the kind of profit margin set. For niche products, a higher margin can be added to ensure the VAR makes money from the sale, but with more popular products that competitors may be selling, it’s

If you win a government contract, it’s crucial to comply with the regulations imposed on you. The Defense Contract Audit Agency (DCAA) has stringent guidelines in place that you should study if you have a defense contract. To help you out, here’s a guide to being DCAA-compliant and improving your timekeeping. DCAA Timekeeping Requirements ⏳ The DCAA provides financial and advisory services to federal entities like the US Department of Defense (DOD). It regulates contract audit services to ensure all contractors pass the requirements, checking that each dollar used was appropriately allocated. As a result, the DCAA mandates timekeeping compliance for its contractors. Knowing how to do it properly is essential for audit purposes; read about the DCAA timekeeping requirements below. 1. Make a Policy That Complies With DCAA 📝 Write a policy document noting the actions to comply with DCAA. This includes noting labor distribution and a way to document hours and dollars by employee, project name or job code. Make sure the policy is complete, thorough, and easy to understand. 2. Tell Everyone About the Policy 🗣 You also need to ensure everyone knows the policy. It’s crucial to inform all staff and supervisors and update them if there are changes. Provide annual training about time-tracking to remind everyone of the policy. 3. Track Time Every Day 🕜 Employees must submit timesheets every day and should not do so in advance or at the end of the week. For accuracy, consider using a time tracking software that automatically reconciles information and performs timesheet approvals. That way, there is little room for error. 4. Compute Labor Cost 🧑‍💻 DCAA determines your project cost based on the number of working hours. Ensure you calculate labor costs based on time. 5. Record Overtime and Paid Time-off 🌴 There are two types of overtime: Uncompensated: Applies to employees with a fixed salary who are not compensated for additional hours. Unpaid: Applies to employees who are paid per hour. Their overtime is compensated. Both types must be recorded for DCAA compliance. Furthermore, you must record paid time off, including: Vacation Holidays Sick leave Bereavement leave Failure to do so may be considered labor accounting fraud. 6. Record Tasks and Projects 🗄 DCAA audits also require a record of tasks and projects. If you use software, select an option that reminds staff to indicate the project they are working on. 7. Take Note of Changes or Corrections ⛔️ If you must change the time-tracking document, indicate the change, the reason behind it, and the time and date it was made. This should be approved by a supervisor. 8. Employees Must Sign Off Entries 👍 If your business uses an automatic time-tracker, your employees should personally sign off the time entries to ensure they’re aware of their working hours. Or, use a time-clock kiosk. 9. Review and Approve Time Records ✅ When your employees approve the timesheets, they should submit them to their superiors for approval. Remember, time records become legal documents, so check them carefully. 10. Separate Timekeeping and Payroll 💵 Keep timekeeping and payroll separate, even though they’re connected. Non-compliance is an offense called “labor discharge” that can result in a maximum of 5 years in prison. Have separate teams to handle payroll and timesheets. Furthermore, employees shouldn’t adjust their time data to suit payroll capacity. DCAA Timekeeping Checklist This handy checklist will help your business remain DCAA compliant. Timekeeping Procedures Keep timekeeping separate from payroll. Implement a clear policy for submission and approval of data. Keep everyone aware of the policy, procedure, and requirements. Give continuous training to ensure awareness. Preparing Timesheets Everyone in the company must track time (whether they’re part of the government contract or not) to produce a thorough audit trail Employees must record working hours themselves, including overtime and paid time off Time should be logged daily and indicate the task or project worked on Timekeeping Policies Superiors cannot fill up a timesheet unless the employee is on paid leave or is gone for a long time The employee and superior must review and approve the timesheet Appoint a system administrator to review timesheets and check for errors. Record reasons, date, and time for each change. Publish timesheets every month or more frequently. Be prepared for random inspections. Timekeeping Systems There are two types of timekeeping systems: manual and automatic. Automatic systems include software, and they’re useful for businesses with more than three employees. They reduce the room for error and can help you ensure DCAA compliance. Conduct research to help you choose the best software for DCAA-compliant timekeeping. One option is Tommy. It can help you with DCAA compliance with an automated time-tracking system. You can select a package depending on your needs and budget, ensuring you get the best software for your needs. Improve Your Timekeeping with Tommy 🐶 DCAA guidelines require government contractors to maintain an accurate record of the time their employees spend on contracts. If your business has a contract, it’s a good idea to maintain accurate records of all work completed for all employees in the business in case of an audit. You can use an automatic time-tracker like Tommy to keep your records up to scratch. Just make sure all your staff are aware of the time tracking policy. Thankfully, with Tommy, recording time is easy! Maintaining compliance doesn’t have to be time-consuming and stressful. Take the hassle out of it with Tommy. Check out our features here. How to Comply With DCAA Timekeeping Guidelines DCAA Timekeeping Requirements 1. Make a Policy That Complies With DCAA 2. Tell Everyone About the Policy 3. Track Time Every Day 4. Compute Labor Cost 5. Record Overtime and Paid Time-off 6. Record Tasks and Projects 7. Take Note of Changes or Corrections 8. Employees Must Sign Off Entries 9. Review and Approve Time Records 10. Separate Timekeeping and Payroll DCAA Timekeeping Checklist Timekeeping Procedures Preparing Timesheets Timekeeping Policies Timekeeping Systems Improve Your Timekeeping with Tommy