A General Manager at a growing services company was running IT on the side of his real job. He onboarded every new hire (laptop, M365 license, the whole setup). He just never got around to canceling the licenses for the people who left. The Microsoft 365 bill went from about $1,500 a month to about $4,000 a month before anyone noticed. When we audited it, twenty ex-employees still had active seats. This is one of the most common patterns we see when we walk into a small business that's outgrown its IT setup, and it has nothing to do with Microsoft. It's how SaaS billing works when nobody is watching the seat count.
Why this happens
Onboarding scales naturally. Offboarding doesn't.
When a company hires someone, the work is visible. Laptop, email address, license, phone extension. Somebody has to go do those things, and they don't get done by accident. A system gets built around it, even if it's informal.
When a company offboards someone, the work is invisible. The person walks out the door. The laptop comes back, maybe. But the M365 license, the Adobe seat, the VoIP extension, the backup user. Those don't show up in a meeting. They just continue to bill, automatically, because that's what SaaS does. The vendor charges on aggregate seat counts; nobody at the vendor is going to call you and say "hey, you have twenty inactive users, you might want to look at that."
So the bill grows. Not in a way that screams. Just $10 here, $35 there, $80 for that expensive Adobe license. None of it triggers the kind of attention a $50,000 hardware purchase would. The General Manager, who's running operations, managing a P&L, and doing IT on the side, isn't going to catch it. He's not paid to audit invoices line by line. He's paid to run the business.
The 20-employee tipping point is when this stops being a small problem. Below 20, one person can hold all of it in their head. Above 20, the head doesn't fit anymore. License tracking is the first thing to slip, because it's the most invisible.
What it looks like in practice
The named example we keep using is M365, because it's the most universal. Here's how the math actually works:
$10 a month doesn't seem like a lot, but when you have twenty people that you've offboarded and they're still paying for the Office 365, it's $200 a month. That's just a small example of licensing. If you don't cancel it, it just continues to rack up.
— Farzad Vahid, Founder, Fornida
Twenty inactive M365 seats at roughly $10 each is $200 a month, $2,400 a year. That's the floor. The actual number gets bigger fast, because M365 is rarely the only thing leaking.
A few of the other places we routinely find license sprawl when we run an audit:
- Adobe Creative Cloud. Per-seat pricing assigned to designers and marketing hires who are gone. One forgotten Adobe seat is roughly the cost of eight forgotten M365 seats.
- VoIP and phone extensions. Carriers bill per line, per extension, per number. Nobody removes a line because nobody wants to be the person who deletes the wrong one. So they sit.
- Backup licenses. Most backup tools bill per protected endpoint. When a laptop goes back into the closet, the backup license quietly continues to back up nothing.
- Niche SaaS. The CRM seat for the salesperson who left. The PM tool seat for the contractor who finished. The design tool a designer set up two years ago and nobody else uses. [NEEDS VERIFICATION on the typical SaaS-leakage range cited below.]
Across all of those, $5,000 to $10,000 a year of quiet leakage isn't unusual at a 30-to-50-person company. None of it screams. There's no single line item that would make the owner sit up. It's just the bills, growing.
That goes for Microsoft. It goes for anything really. Even your phone lines, it can go for your backups, all of that. You have to manage every single piece of license. Adobe, it could be anything. So if you don't have a protocol for offboarding people and you're not canceling all those licenses, you're basically throwing money away.
— Farzad Vahid, Founder, Fornida
The framing matters here. This is not a Microsoft pricing problem, or an Adobe pricing problem. The licensing model is what it is: per-user, monthly, auto-renew, billed in aggregate. Vendors have no incentive to call you. Managing the seat count is the customer's job. The question is whether the customer has anyone whose job it actually is.
What to do about it
There's a clean version of this problem and a slow version. Here's the order we use when we walk in.
1. Run a license audit. All vendors, all SaaS, all phone lines, all backup software. Pull the current invoice for each one and reconcile against the active employee list. Most owners are surprised by what comes off the list in the first hour, not because the spend is huge, but because the names on the licenses are people who haven't worked there in a year. The audit doesn't need to be elegant. A spreadsheet is fine. You just need to do it.
2. Build an offboarding protocol that includes license cancellation. This is the actual fix. Onboarding has a checklist; offboarding needs the same checklist, in reverse. Every license added at hire is a license to cancel at exit. Our philosophy on the cancel side is the simple one:
We like to cancel and just start over. It's just easier to manage 'cause then you're not getting like older emails. You just start over fresh.
— Farzad Vahid, Founder, Fornida
Not "transfer the inbox to a manager," not "leave it active just in case." Cancel the license, archive the data externally if it matters for compliance or knowledge retention, and move on. It's cleaner for the bill, cleaner for the audit trail, and cleaner for security. Abandoned credentials sitting in a forgotten account are the kind of thing that gets phished into a problem later.
3. Hand the seat-count work to someone who watches it. This is where the GM-running-IT pattern has to stop. A General Manager doing IT on the side will keep doing the visible work (onboarding, laptop hand-out, new-hire setup) and keep dropping the invisible work. That's not a personal failing; it's what happens when IT is on the side of someone's desk.
The structural answer is co-managed IT. The General Manager keeps the parts that need a person inside the company: coordinating new hires, deciding what tools the team uses, setting expectations with employees. A managed IT partner picks up the parts that need someone whose full-time job it is to watch them: license audits, offboarding execution, vendor renewals, the quarterly reconciliation between what you're paying for and what you're actually using. The cost case becomes obvious the first time someone audits the licenses. Recovering $5,000 to $10,000 a year of leaked spend covers a meaningful chunk of a co-managed engagement before any of the other work gets factored in.
What this isn't
A couple of things worth being clear about. The licensing model isn't predatory. Per-user-per-month is how SaaS economics work, and Microsoft, Adobe, and the VoIP carriers are partners we recommend. The point isn't to switch vendors; it's to manage the seats you're already paying for. And the General Manager isn't doing a bad job. He's doing IT on the side of running the business. That's a structural problem, not a competence problem. Every growing company hits this point. The question is what you do when you hit it.
A 30-minute conversation, no commitment
If you're reading this and quietly suspecting that your M365 bill might be doing the same thing, or that nobody at your company has actually reconciled the active-license count against the active-employee count in a while, we're happy to walk through it with you. It's a free 30-minute call. We'll look at your license footprint, point at what's likely leaking, and tell you what we'd do about it.
You're welcome to take that and run it internally if you want. No pressure, no strings attached. If you decide the work is worth handing off and we're the right fit, we can talk about what an engagement looks like. If not, you've still got the audit shape and you can run it yourself.
Schedule a 30-minute IT spend review. No pitch deck, no obligation. Just a look at where the money is going.
---C
