Simply The Best (Practices): Autotask Contract Configurations
Welcome, Autotask Warriors! Here’s what you’ll get insight on today:
The Challenge of Configuring Contracts in Autotask
The “Best” Autotask Contract Config Starts with the Basics
What to Know About Non-Labor Contracts
Understanding the Types of Contracts
All About Labor Cascading Contracts
Did you enjoy the mid-year review last week? Good…because it’s time to get back to work. If you recall, I promised you the plan to get your MSP operations up to snuff and a healthy profit growth by the end of the year. We’ve got plenty of best practices left to discuss, so let’s go.
Some of you may have picked up on the title referencing the late, great Tina Turner’s 1991 hit song. I believe Advanced Global is the best in Autotask Service Delivery coaching. I know you only want the best Autotask setup, so here we are.
The Challenge of Configuring Contracts in Autotask
Knowing the best way to configure Contracts in Autotask is more difficult than finding James Bond’s Goldeneye because it’s the hardest Autotask “Best Practice” to document and communicate.
The reason for this is simple: the many fingers in the development pie over the years. The original Contract Module was designed and developed by Bob Godgart in the early 2000’s.
Years later someone connected Contracts to Services and opened the door for Pax8 and Sherweb integrations to manage SaaS license billing. In 2016, Joe Rourke championed the Rule-Base Billing model. Since then, several versions of Subscription invoicing have been added.
Confused? I know I have been.
The “Best” Autotask Contract Config Starts with the Basics
Simply “the Best” Autotask Contract Configuration starts with understanding a few Autotask Contract basics:
The Default Service Desk Contract checkbox is for the Primary Labor Contract, as this is the contract that will be added to all tickets for the Client by default.
You can “Cascade” contracts together, so as the Labor Time Entries filter through the Cascade, the proper Billing Rate for that Client is what appears in A&P.
All non-Labor Contracts (Services, Licensing, Subscriptions, Hardware-as-a-Service, etc.) are best handled in a non-Labor Cascade contract.
What to Know About Non-Labor Contracts
When it comes to non-Labor Contracts, there are a few more things that need to be taken into consideration:
Licenses are for SaaS products such as Microsoft 365, Adobe Acrobat, and Defender.
Subscriptions are Hardware-based licenses such as Meraki, AV, Endpoint protection.
Subscriptions and Services are separate tabs in Approve and Post, and separate line items on the invoice.
It is confusing to the Client why one license shows up as a Service and another as a Subscription, so almost all MSPs invoice SaaS licenses and Hardware-based licenses as a service, which means they do not use any of the Subscription tracking modules.
Monitoring renewals is a pain in the butt as there is no widget or standard report that provides the tracking information for services (Licenses and Subscriptions) start and end dates. For this reason, most MSPs have a contract per license with the end date of the contract matched to the renewal date of the license or subscription.
If the Client would prefer one line item for all Managed Service licensing, then a single non-Labor contract is needed, and the MSP needs to rely on an Advanced Live Report to monitor renewal dates.
Most MSPs send out at least two invoices per month.
Recurring Services are invoiced in advance, somewhere in the middle of the month, for next month, and are due on the 1st of the month.
Labor is invoiced in arrears on the 1st of every month for last month.
There are a few MSPs that send one invoice per month, on the 1st of the month, with Recurring Services in advance and Labor in arrears.
Understanding the Types of Contracts:
Recurring Services Contract – mostly used for Services (Licenses, Subscriptions, HaaS, etc.), and can be used for the Default Service Desk contract for Managed Service Labor.
Time & Material Contract – mostly used for Labor Contracts when the Standard Role Rate needs to be adjusted.
Fixed Price Contract – mostly used for Project Work Type.
Block Hour Contract – mostly used for Labor that is limited in the Managed Service Agreements.
Retainer Contract – Very seldom used.
With that background (hopefully you are now less confused than you were before), so let’s jump in and discuss the optimal contract configurations in Autotask:
Labor Cascading Contracts:
The first decision in building a Labor Cascading Contract array is what type of contract is going to see the most amount of time entries. This contract will become the Default Service Desk contract for no other reason than limiting the number of times a Tech sees the “This Work Type is Excluded from the Contract” pop up warning. It would be nice to turn off this annoying feature, but alas, that is not in the cards.
The Default Service Desk contract can be any type of contract. For most MSPs, it is a T&M contract with the Role Rates zeroed out because the labor is actually billed under a Recurring Services contract, per MSA. We recommend a Recurring Services Contract, which by its very nature zeros out the billable hours. Have the Managed Service Labor invoiced from this contract. Having a Recurring Services Contract as the Default Service Desk contract makes profitability reporting easier - but again, the Default Service Desk contract can be any contract which makes Autotask contracts very confusing to configure.
Any work that is to be invoiced to the Client as a line item (think Project, Afterhours, and for some Clients, On-Site) is excluded from the Default Service Desk contract. This includes types of work limited by the MSA, such as agreements that include only 4 hours of Remote or On-Site work per month.
If the labor is to be billed at the Standard Role Rate (SRR), no contract is needed. Creating a Time Entry without a contract will send the Time Entry directly to Approve and Post without passing go or collecting $200.
If the Time Entry is excluded from the Default Service Desk contract without designating an Exclusionary Contract, the Time Entry will go to Approve and Post at the SRR adjusted by the Work Type.
The process for determining the Default Service Desk contract and all Cascading Exclusionary contracts is:
Review all MSA agreements and capture Labor Types of Work that is:
Included
Excluded
Limited (Ex: # of hours per month)
With this information in hand, the minimal number of Roles per Employee (hopefully one role for each Employee) and the minimal number of Work Types (hopefully less than 10) can be determined. A typical list of Work Types is:
Monitoring or Maintenance – SRR
Remote Support – SRR and used to exclude or limit from Monitoring Only
On-Site Support – SRR and used to exclude or limit
Project Work – SRR+ and excluded from all Managed Services Contracts
Afterhours Work - SRR+ and excluded from all Managed Services Contracts
Non-Billable (Does not show on Invoice) **
Non-Chargeable (Does show on Invoice)
** Note about Billable vs Non-Billable types of work:
Sometimes the assumption is if it is covered by a contract, it is non-billable. This is not quite correct. It will be billed under the Managed Service Agreement, so the Customer will not see the specific line item. But in general, it is still a billable time entry. One manager described it this way, “IF WE ARE ENTITLED TO BE PAID, IT IS BILLABLE; IF WE ARE NOT ENTITLED TO BE PAID, WARRANTY WORK, BUSINESS DEVELOPMENT ASSESSMENT, ETC., THEN IT IS A NON-BILLABLE WORK TYPE AND NON-BILLABLE TIME ENTRY.” Adam V
Summary: Labor Cascading Contracts
Step 1: Review the MSAs on a Client-by-Client basis and determine what type of Labor is Included, Excluded, or Limited by the agreements.
Step 2: Review the Roles and Work Types, and reduce the Roles to one per Employee, and the Work Types to less than 10. If reducing the Work Types to less than 10 is not possible, consider using Ticket and Task Categories and limiting the # of Work Types to less than 10 per Ticket or Task Category.
Step 3: (Optional) If the Excluded list of Work Types is lengthy, then creating Exclusions Sets of Excluded Work Types will speed up the time it takes to create Contract Templates. If it is just one or two Work Types, it is not worth creating Exclusion Sets.
Step 4: Create a Recurring Service contract in the MSP’s Account Name (also known as the Zero account because the Account ID is Zero) to be used as the Default Service Desk Contract template when copying into Client accounts.
There are three contract fields that are required to be populated for contract management to work properly on the Service Delivery side of the house.
Default Service Desk Contract, which is set during the copying to Client account phase
Contract Categories: the Service Desk Workflow Rules cannot actually see the contract, what they see is the Contract Category field, and if the field is empty, a recommended Workflow Rule would apply the Non-Contract SLA to tickets created for Managed Service Clients.
Service Level Agreement: so the proper response times are applied to this level of Managed Service Client
Step 5: Determine if any Exclusionary Contracts are needed, and if so, create Exclusion Contract Templates in the Zero Account using the T&M contract type:
If all Excluded Labor is excluded at the Standard Role Rate adjusted by Work Type, then no Exclusion Contract(s) are needed.
Create Exclusion Contract(s) for each type of Excluded Work Type that is not billed at the Standard Role Rate for any Client.
Step 6: If Exclusionary Contracts are needed, Cascade them to the Recurring Services contract template in the order of most used to least used. The copy wisizrd will copy the Recurring Services contract and all the linked Exclusionary contracts at the same time – saving you many keystrokes and missing a connection.
We do not recommend linking Fixed Price (Project) contracts to the Cascade, but instead manually set the contract in the Project Ticket or Project/Tasks.
Step 7: Use the copy wizard to copy the Cascading Labor Contract Template into the Client Accounts. This allows all contracts in the cascade to be copied in one fell swoop.
When copying the Cascade, be sure to set the Recurring Services contract as the Default Service Desk Contract
Note: You may need a Labor Contract Cascade template for each group of Exclusions (Level of Managed Service Agreement Client). You do not need a different template for different billing rates as you can modify these during the copy process.
At Last…the Conclusion
WHEEEW, I know that seemed like a lot. And that was just for Labor. Go through it a couple times, and I think you’ll see it starting to make sense. If it is Clear as Mud, shoot us an email at Info@AGMSPCoaching.com with the word “HELP” in the subject line, and we will do our best to get you unstuck.
With any building, a firm foundation is critical to longevity and profit (just ask the Three Little Pigs). Simply getting your contracts in order now will save you a lot of trouble later. You can be “simply the best” MSP.
“Let’s stay together.” Next week, we will jump in and talk about Services (Licenses, Subscriptions, HaaS, etc.). I know you don’t need another hero, but the Advanced Global Hero Coaches are available via email at info@AGMSPCoaching.com or at our free weekly “Ask the Experts” for any help you may need (See AGMSPCoaching.com for meeting times/links).
To your success,
Steve & Co
The elephant in the room:
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