Service agreement hygiene: Getting it all in order 

A client turned down your backup and security recommendations due to budget constraints. Then they got hit with a ransomware attack, and their cyber insurance carrier started asking questions. A technician made an exception for a client. Now the exception has created an expectation without compensation. It’s time to turn to your service agreements and documentation.  

Practicing good agreement hygiene means having all your client documentation current, signed and organized. It should cover what your MSP services deliver, what they don’t and who is responsible for what. Keeping everything up to date is an ongoing process, but it isn’t an urgent task, so it has potential to slip off the list of priorities.  

We asked MSP owners about their service agreement hygiene, common issues they’ve faced and their advice on how to keep their documentation current. Here’s what they said. 

What goes wrong when agreements fall behind 

Neither business is protected 

A client refusing your security recommendations does more than put their business at risk of cyberattacks or lost data. It puts your business at risk, too. 

“Let’s say a client declines a recommended security solution or backup service because they don’t want to spend the additional money. Six months later, they experience an attack and lose critical business data. If you don’t have documentation showing that you recommended the protection and that the client knowingly declined it, you could find yourself in a very difficult position. We shouldn’t be assuming responsibility for risks that a client has knowingly decided to accept.” 

— Ryan Rolfsmeier, CEO of Simplified IT Solutions 

Responsibility your client never agreed to 

Ask a client who owns their data and their security. Some will say their MSP does; others might say they do. Without a written responsibility agreement, clients may not realize there is a gap between the protection they think they have and what they pay for. 

“We have had some clients that believed we had more responsibility for their network and their data than they did. We focused on walking them through the thought that if we were more responsible than they were, we would add more security products to help keep them safer, and that meant opening up their budget to more spending. Then the light bulb moment happened for them.” 

— John Kistler, Owner of J&B Technologies 

Service creep your agreement doesn’t cover 

Service creep starts with good intentions. A tech handles something outside the agreement because it’s faster than explaining why it isn’t covered. Then it happens again. Over time, the client starts planning for it. 

“Over time, those exceptions become expectations, and suddenly you’re providing services you’re not being compensated for.” 

— Rolfsmeier 

Vendor terms change  

When vendors are acquired or their products change or retire, you must update agreements. An agreement built around a product or vendor that changed can lead to gaps in protection, differences in cost, and conflicts with insurance or compliance regulations. 

“The sticky point for us is always when one of our products gets purchased or absorbed by another company in the MSP space. We currently use SkyKick for our O365 migrations, and after ConnectWise bought them, we did our best to see if the terms and conditions would change substantially with the new owners. Most of this is a guessing game, but notating the management change and adding to our agreement that some products might be purchased and the agreement might change has kept our clients in the loop when mergers happen or features change.” 

— Kistler 

What a clean agreement looks like 

A clean agreement covers what your client expects from you and what you expect from your client. No room for assumptions. 

“A clean agreement must be fair for both parties. That means mutual responsibility, a fair amount of notice for termination and a flexible way to adjust without renegotiating the entire contract.” 

— Ari Spillman, CEO of CNS Data 

“A clean agreement has to have the responsibility matrix well defined and agreed upon, and then revisited when new services are brought on.” 

— Kistler 

What clean agreements include 

According to Rolfsmeier, agreements reflect exactly what the MSP delivers to the client. 

“Our agreements address several important areas: 

• Scope of services: Exactly what we’re responsible for supporting and, equally important, what we’re not responsible for 

• Cybersecurity responsibilities: What security controls we’re providing, what we’re recommending and what responsibilities remain with the client 

• Limitations of liability: Appropriate protections that recognize cybersecurity risk can be reduced but never completely eliminated 

• Billing and payment terms: How services are billed, how quantities are adjusted and what happens if invoices aren’t paid 

• Termination and offboarding: Clear expectations for ending the relationship, returning client information and providing transition assistance 

• Third-party services: Clarity around products and services we resell or manage but don’t directly control” 

— Rolfsmeier 

How to keep your agreements clean 

An agreement audit 

Start by finding out what service agreements and documentation you have for each client. Expect surprises: agreements several years old, services that were never documented and accounts with nothing signed at all. Work through your list starting with your largest clients and those at high risk.  

“I don’t want to rely on an agreement that an attorney drafted five years ago and that nobody has reviewed since.”  

— Rolfsmeier 

Update paperwork with a professional 

When you know what you are missing, you can start filling in the gaps. This goes beyond just getting a signature on a document. It also means making sure your agreements are up to date and legally binding.  

“Get in touch with a lawyer who truly understands the MSP business. Do not go to your local family law firm. We partner with our law firm to write up our agreements and maintain them regularly. We know what we are good at and what we are not. Leave it to the professionals.” 

— Spillman 

Discuss updates with clients 

New terms land better when clients understand the reasoning. Explain why things are changing and how it will affect them, especially during contract renewals or client budget conversations. Consider pushback an opportunity to have a conversation about the importance of security and the value of your services.  

“When your agreements are in order it’s easier to discuss the changes with your client and the ‘why’ behind it, and to us, when the client sees that we are trying to cover as many bases as possible it elevates the whole relationship.” 

— Kistler 

“Explain the reason for change. [Talk about] how this also helps protect them, and incentivize new contracts that have additional value.” 

— Spillman 

Agreement hygiene is a growth strategy 

Owners tend to think of agreements as just protection. However, when things are kept in order, they can be an advantage. 

“Professionalism and predictable process. If a client feels that your firm is professional and predictable, and dotting all the i’s and crossing all the t’s, they are less likely to shop around and your perceived value goes up in their eyes. That makes it easier to sell vCIO and vCISO services to them.” 

— Kistler 

“If you don’t have service agreements in place as you scale, you will start to lose the ability to maintain your existing client base and all the growth will stop. You need to be well prepared so that you never have to worry about legal trouble while you focus on growth.” 

— Spillman 

“If a company has hundreds of thousands of dollars in recurring revenue but cannot produce signed agreements supporting it, that introduces uncertainty for a buyer, lender or investor.” 

— Rolfsmeier 

Stop waiting for a reason 

Agreement hygiene isn’t something you take care of when you get around to it. What is the best time to start getting everything in order? 

“Yesterday.”  

– Spillman 

“The best time was before you started providing services. The second-best time is today.”  

– Rolfsmeier 

“Set a day on your calendar and go Nike – just do it.”  

– Kistler 

A handshake is great for building relationships, but it isn’t a substitute for a signed agreement. It’s time to move your service agreement hygiene tasks to the top of your to-do list. Remember, just because it isn’t an urgent task doesn’t mean it shouldn’t be a priority. 

Clean contracts are also one of the first things a buyer asks for. Read How to build a sale-ready MSP to learn more.