Stephen D Buyze

“Empowering Managed Service Providers to Increase Profit”

How Autotask Contract Automation is like printing $$$

Did you know 18% of the work at your Managed Service Provider could be billable? Seriously! Here’s how you can achieve this successfully.

 Nothing is more frustrating than having a smooth-running MSP business, only to find out that 18% of your work could have been billable. It is not your fault. As one Customer pointed out, Autotask PSA Contract videos do not provide a complete story. 

To remedy the situation, here is our best advice, or as another Customer put it  

Stephen takes away the (Contract Automation) scary.”  

Time Entry  Contract Automation  Billing 

Let’s take away the “scary” by breaking it all down for you, piece-by-piece. Here is the day in the life of a Time Entry as it flows through the Contract and Billing Automation:

Click here to subscribe and download our Billing Process Visio. 

Time Entry 

For example: Tech works from 1:38 pm to 2:58 pm – 1 hour and 20 minutes. This is what is reported on their timesheet and in the Resource Utilization reporting. However, for Approve & Post and Billing purposes, the Time Entry is rolled up to 15-minute increments – 1 hour and 30 minutes. 

Applying the Role: 

The Role sets the Standard Billing Rate and Block Hour Multiplier by the Skill Set needed to complete the engagement (Role). 

Let’s assume you have four roles: Technician, Sr. Technician, Bench Tech, and Architect, and their Rates and Multipliers are: 

  • Technician $150, & 1X 
  • Sr. Technician $175, & 1.2X 
  • Bench Tech $125, & .85X  
  • Architect $225, & 1.5X 

Applying the Work Type: 

Let’s assume you have four Work Types: Support (both Remote and Onsite), Afterhours, Project, and TravelHere is how the Work Type adjusts the Role Rate applied to the Time Entry:  

Support is at Standard Role Rate, therefore: 

  • Technician @ $150 x 1.5 Hours = $225.00 
  • Sr. Technician @ $171.5 Hours = $262.50 
  • Bench Tech @ $125 1.5 Hours = $187.50 
  • Architect @ $225 1.5 Hours = $337.50

Afterhours is a Time and Half (1.5) multiplier: (Note: this block hour supersedes the Roles Block Hour Multiplier) 

  • Technician @ $150 x 1.5 hours 1.5 multiplier = $337.50 
  • Sr. Technician @ $171.5 Hours 1.5 multiplier = $393.75 
  • Bench Tech @ $125 1.5 Hours 1.5 multiplier = $281.25 
  • Architect @ $225 x 1.5 Hours x 1.5 multiplier = $506.25 

Project is adjusted by + $50.00 over Role Rate 

  • Technician @ $150 + $50 = $200 x 1.5 Hours = $300.00 
  • Sr. Technician @ $175 + $50 = $225 1.5 Hours = $337.50 
  • Bench Tech @ $125 + $50 = $175 1.5 Hours = $262.50 
  • Architect @ $225 + $50 = $275 x 1.5 Hours = $412.50

Travel is a Custom Rate of $75 per hour and “Never Bills Less than 1 hour” 

  • Technician @ $75 x 1.5 Hours = $112.50 
  • Sr. Technician @ $75 x 1.5 Hours = $112.50 
  • Bench Tech @ $75 x 1.5 Hours = $112.50 
  • Architect @ $75 x 1.5 Hours = $112.50 

If the Customer is a non-Managed Services Customer, this is the end of the line and is what will be seen in Approve and Post, Billing, and on the Invoice.  

For Managed Service Customers, the options continue 

Primary Default Contract: A Managed Service (Recurring Services) Contract:      

Here is where what is In and Out of the agreements becomes importantNote: all work under a Managed Service Contract is “Billable Work.”  

One supervisor from my past explained it this way: “If we are entitled to be paid for the work we have done, In-Contract or Out, it is billable. What is non-billable is Warranty work, Business Development work, etc. How the Customer is being billed for the work – under a Managed Services Agreement or by a T&M line item – does not change if the work is Billable or Non-Billable. It is Billable.”    

How does it all play out in the billing process? 

Let’s say: 

  1. Support and Travel Work Types, along with Technician and Sr. Technician Roles, are within the agreement. 
  2. Afterhours and Project Work Types, and Bench Tech and Architect Roles are out of the agreements. 

Notefor the sake of simplicity we have only considered one level of Managed Service Agreements. If there are Silver, Gold and Platinum levels, then each level will have its own In and Out of agreement scenarios. 

Support Work Type is either In or Out of the agreement depending, on the Role, therefore: 

  • Technician @ $150 x 1.5 Hours = Included in Contract 
  • Sr. Technician @ $175 1.5 Hours = Included in Contract 
  • Bench Tech @ $125 1.5 Hours = Excluded $187.50 
  • Architect @ $225 1.5 Hours = Excluded $337.50 

Afterhours Work Type is Excluded or Out of the agreement, therefore: 

  • Technician @ $150 x 1.5 hours 1.5 multiplier Excluded $337.50 
  • Sr. Technician @ $175 1.5 Hours 1.5 multiplier = Excluded $393.75 
  • Bench Tech @ $125 1.5 Hours 1.5 multiplier = Excluded $281.25 
  • Architect @ $225 x 1.5 Hours x 1.5 multiplier = Excluded $506.25 

Project Work Type is Excluded or Out of the agreement, therefore: 

  • Technician @ $150 + $50 x 1.5 Hours = Excluded $300.00 
  • Sr. Technician @ $175 + $50 1.5 Hours = Excluded $337.50 
  • Bench Tech @ $125 + $50 1.5 Hours = Excluded $262.50 
  • Architect @ $225 + $50 1.5 Hours = Excluded $412.50 

Travel Work Type is either In or Out of the agreement depending on the Role, therefore: 

  • Technician @ $75 x 1.5 Hours = Included in Contract 
  • Sr. Technician @ $75 x 1.5 Hours = Included in Contract 
  • Bench Tech @ $75 x 1.5 Hours = Excluded $112.50 
  • Architect @ $75 x 1.5 Hours = Excluded $112.50 

If the MSP is not using Exclusionary Contracts, then this is the end of the road and it is passed on to Approve and PostIn which case there is a fair amount of manual updating before invoicing.  However, there is so much more power in the PSA software if we end the story here 

So, let’s dive into Contract Exclusions and take a glimpse at what else can be done! 

Secondary Exclusion Contracts: 

If the Work Type or Role is excluded from the Managed Services Contract and one of these Exclusion Contracts is designated as next in the cascading flow of Contracts, then these apply 

Note: Cascading Contracts means that the Time Entry flows through multiple combination of contracts (Ex: MS  Block Hour  Retainer  Fixed Price  T&M Contracts) on its way to Approve and Post. 

Block Hour Exclusion Contracts 

Lets assume that for Bench Tech and Architect, there is a Block Hour Exclusion Contract for this Customers Managed Service Agreement, and it is next in the Cascading Billing process flow: 

 Note: here we are tracking Hours, not $$ (Euros)  

Support Work Types that are Excluded from the Managed Service Contract are: 

  • Bench Tech @ .85X 1.5 Hours = 1.275 Hours 
  • Architect @ 1.5X 1.5 Hours = 2.25 Hours 

Afterhours Work Type is also Excluded or Out of the Block Hours agreement, therefore: 

  • Technician @ $150 x 1.5 hours 1.5 multiplier Excluded $337.50 
  • Sr. Technician @ $175 1.5 Hours 1.5 multiplier = Excluded $393.75 
  • Bench Tech @ $125 1.5 Hours 1.5 multiplier = Excluded $281.25 
  • Architect @ $225 x 1.5 Hours x 1.5 multiplier = Excluded $506.25 

Project Work Type is also Excluded or Out of the Block Hours agreement, therefore: 

  • Technician @ $150 + $50 x 1.5 Hours = Excluded $300.00 
  • Sr. Technician @ $175 + $50 1.5 Hours = Excluded $337.50 
  • Bench Tech @ $125 + $50 1.5 Hours = Excluded $262.50 
  • Architect @ $225 + $50 1.5 Hours = Excluded $412.50 

Travel Work Type is also Excluded or Out of the Block Hours agreement, therefore: 

  • Bench Tech @ $75 x 1.5 Hours = Excluded $112.50 
  • Architect @ $75 x 1.5 Hours = Excluded $112.50 

Retainer Exclusion Contracts: 

Let’s assume the Customer also wants some of the Afterhours work included as part of the Afterhours work, but the MSP wants to limit how much is included. A Retainer Hour Contract works well for this scenario: 

Afterhours Work Type: 

  • Technician @ $150 x 1.5 hours 1.5 multiplier Included up to $X,XXX.00 then Excluded $337.50 
  • Sr. Technician @ $175 1.5 Hours 1.5 multiplier = Included up to $X,XXX.00 then Excluded $393.75 
  • Bench Tech @ $125 1.5 Hours 1.5 multiplier = Included up to $X,XXX.00 then Excluded $281.25 
  • Architect @ $225 x 1.5 Hours x 1.5 multiplier = Included up to $X,XXX.00 then Excluded $506.25 

Project Work Type is also Excluded or Out of the Retainer agreement, therefore: 

  • Technician @ $150 + $50 x 1.5 Hours = Excluded $300.00 
  • Sr. Technician @ $175 + $50 1.5 Hours = Excluded $337.50 
  • Bench Tech @ $125 + $50 1.5 Hours = Excluded $262.50 
  • Architect @ $225 + $50 1.5 Hours = Excluded $412.50 

Travel Work Type is also Excluded or Out of the Retainer agreement, therefore: 

  • Bench Tech @ $75 x 1.5 Hours = Excluded $112.50 
  • Architect @ $75 x 1.5 Hours = Excluded $112.50 

Fixed Price Exclusion Contract: 

Fixed price contracts work best for Projects. Here, the project rate can be the standard rate and billed at Milestones, Adjusted or Included. It is hard for me to get my head around how a Fixed Price can still mean by the Hour, so we are going to go with including it in the Fixed Price: 

Afterhours Work Type is also Excluded or Out of the Fixed Price agreement, therefore: 

  • Technician @ $150 x 1.5 hours 1.5 multiplier Over the Retainer $X,XXX.00 then Excluded $337.50 
  • Sr. Technician @ $175 1.5 Hours 1.5 multiplier = Over the Retainer $X,XXX.00 then Excluded $393.75 
  • Bench Tech @ $125 1.5 Hours 1.5 multiplier = Over the Retainer $X,XXX.00 then Excluded $281.25 
  • Architect @ $225 x 1.5 Hours x 1.5 multiplier = Over the Retainer $X,XXX.00 then Excluded $506.25 

Project is Included or In the Fixed Price Agreement, therefore: 

  • Technician @ $150 + $50 x 1.5 Hours = Included 
  • Sr. Technician @ $175 + $50 1.5 Hours = Included 
  • Bench Tech @ $125 + $50 1.5 Hours = Included 
  • Architect @ $225 + $50 1.5 Hours = Included 

Travel Work Type is also Excluded or Out of the Fixed Price agreement, therefore: 

  • Bench Tech @ $75 x 1.5 Hours = Excluded $112.50 
  • Architect @ $75 x 1.5 Hours = Excluded $112.50 

Final Contract: A T&M Exclusion Contract 

Letassume that you are a good guy and if the Customer has a Managed Service Agreement, all Out of Agreement work is done at a 20% discount off your Standard Rates.  

Afterhours is therefore: 

  • Technician @ $150 x 1.5 hours 1.5 multiplier Over the Retainer $X,XXX.00 then Excluded $337.50 – 20% discount = $270.00 
  • Sr. Technician @ $175 1.5 Hours 1.5 multiplier = Over the Retainer $X,XXX.00 then Excluded $393.75 – 20% discount = $315.00 
  • Bench Tech @ $125 1.5 Hours 1.5 multiplier = Over the Retainer $X,XXX.00 then Excluded $281.25 – 20% discount = $225.00 
  • Architect @ $225 x 1.5 Hours x 1.5 multiplier = Over the Retainer $X,XXX.00 then Excluded $506.25 – 20% discount = $405.00 

Travel is therefore: 

  • Bench Tech @ $75 x 1.5 Hours = Excluded $112.50 – 20% discount = $90.00 
  • Architect @ $75 x 1.5 Hours = Excluded $112.50 – 20% discount = $90.00 

Approve and Post: 

Wow, that was a mess. If you are following it closely and noticed where different Time Entries dropped out of the Contract Automationthen it makes sense that this is what is seen at Approve and Post: 

Support Time Entries: 

  • Technician @ $150 x 1.5 Hours = Included in Managed Services Contract 
  • Sr. Technician @ $175 1.5 Hours = Included in Managed Services Contract 
  • Bench Tech @ .85X 1.5 Hours = Included in the Block Hours Contract 1.275 Hours 
  • Architect @ 1.5X 1.5 Hours = Included in the Block Hours Contract 2.25 Hours 

Afterhours Time Entries: 

  • Technician @ $150 x 1.5 hours 1.5 multiplier Included in Retainer Contract up to $X,XXX.00 then Excluded $337.50 
  • Sr. Technician @ $175 1.5 Hours 1.5 multiplier = Included in Retainer Contract up to $X,XXX.00 then Excluded $393.75 
  • Bench Tech @ $125 1.5 Hours 1.5 multiplier = Included in Retainer Contract up to $X,XXX.00 then Excluded $281.25 
  • Architect @ $225 x 1.5 Hours x 1.5 multiplier = Included in Retainer Contract up to $X,XXX.00 then Excluded $506.25

Project Time Entries: 

  • Technician @ $150 + $50 x 1.5 Hours = Included in Fixed Price Contract 
  • Sr. Technician @ $175 + $50 1.5 Hours = Included in Fixed Price Contract 
  • Bench Tech @ $125 + $50 1.5 Hours = Included in Fixed Price Contract 
  • Architect @ $225 + $50 x 1.5 Hours = Included in Fixed Price Contract 

Travel Time Entries: 

  • Technician @ $75 x 1.5 Hours = Included in Managed Services Contract 
  • Sr. Technician @ $75 x 1.5 Hours = Included in Managed Services Contract 
  • Bench Tech @ $75 x 1.5 Hours = Excluded $112.50 – 20% discount = $90.00 
  • Architect @ $75 x 1.5 Hours = Excluded $112.50 – 20% discount = $90.00

Note: for Non-Managed Service Customers, they see the Standard Rates at Approve and Post. 

Invoicing:  

Invoicing should match Approve and Post. If not, please let us know and we will direct you to an Autotask Certified Consultant Partner who knows the billing process well 

We are Service Delivery experts and fully understand how Time Entries flow through to Approve and Postbut that is the end of our experience and there are better people to serve you beyond Approve and Post in the Billing process. 

Click here to subscribe and download our Billing Process Visio.
Tagged , , , , , , , ,

Leave a Reply