Sweet holy mother of all things ridiculous. Please tell me that as a managed services provider you have your contracts ready to go and that EVERY client has a signed contract on file. Don’t tell me about a credit card authorization form or a signed quote or a signed proposal. YOU MUST HAVE CONTRACTS.
Let’s go over the basics. A contract does some of the following:
1. Limits your liability (ie…liability for any provider caused issues will be limited to the amount paid to the provider)
2. Sets forth the payment terms and amount (ie…$2,000 for 36 months due on the 15th of each month)
3. Describes early termination penalties (ie…client must provide thirty days written notice of intent to cancel. Remainder of contract value will be prorated
4. Non-hire/Non-solicitation WITH PENALTIES DESCRIBED (ie…we won’t hire your employees, don’t hire ours. If you do hire our employees you agree to pay us a penalty equal to one year’s salary of hired employee)
5. Sets the venue for disputes (ie….requires mediation…disputes will be handled in our state and county)
These are the basics of every contract. Here are some common contracts you need to have at the ready:
1. Master services agreement (rates, after hours, response times, trip charges, emergency fees)
2. Managed services (what’s covered, what’s not covered, what devices/employees are covered, service level agreement, response times, etc)
3. Riders to Managed services (anti spam, anti virus, hosted exchange, etc)
4. Hardware as a Service/Software as a Service (These contracts have to be airtight, locked down and have strict cancellation terms, you have a lot riding on this)
People, make the investment in getting contracts created and reviewed. Service managers are the gatekeeper. No scheduled on boarding or projects begin until contract is in service manager’s hands. And for the love of all things holy, we are NOT ordering a single thing until the contract is signed and in hand.
Your sales people should know these contracts inside and out. They are the ones walking the client through the contract. The contract is not EMAILED and left to the client to pick apart. The client can certainly have their attorney review but our sales people must walk them through their first pass.
Read between the lines. This is a boring topic and not one I’m terribly thrilled to write about but there is a reason. It’s end of year, clients are reviewing budgets and my phone is getting blown up by YOU asking what you should do when the client calls to cancel. Refer to the contract…oh you don’t have one? Well, I’m sorry for you but fix that problem NOW.
It is sadly not a matter of IF you’ll be sued, have a client steal an employee, or have a client cancel mid term with a big balance, it is a matter of WHEN.
Call me if you need some help. I have lots of samples for your attorney to boiler plate.
JP
Tags: contracts, josh peterson, liablility, managed services, msa
Thanks Josh, for the reminder, particularly about rider contracts. As usual, your straight up and down writing style serves as a call to action. I may have to take you up on your offer of contract samples too!