Although business relationships are built on respect and trust, contracts are created and used to protect both parties. Whether you’re a company providing goods or even a software provider, these contracts ensure both sides are on the same page and set expectations between the two.
It’s essential contracts are as detailed as possible and aren’t limited in any way, since it can take additional hours to negotiate new terms and remove barriers. That’s why it’s important to set up a framework with your partner to ensure productivity is streamlined, support is met, and services are delivered as promised. That’s what a master services agreement carries out. Here’s what you should know about master services agreements.
What is a Master Services Agreement?
In the business world, a master services agreement (MSA) is set up between two parties to create a set of terms agreed upon to all other contracts – like statements of work (SOW) and Service Level Agreements (SLA).
Instead of relying on an SLA to carry the weight, an MSA is the overarching document that is the catch-all for agreements and sub-contracts. It’s the final source of truth between customer and company.
An example would be an MSA on schedules and hours. After negotiating the MSA, Joe Customer issues a service level agreement to Yabbit for tech support in relation to their cloud system. Our Yabbit ears perk up when it comes to supporting our customers. We’re all about our customers. If Yabbit accepts, then employees defined in the SLA need to be available to the client, even though hours weren’t designated in the MSA.
The master services agreement is the starting point for the two companies. If no other terms or exceptions are brought up, the MSA is the main document.
What’s the Difference Between a Master Services Agreement and Service Level Agreement
Although both are legal agreements that establish terms and conditions in a vendor relationship, they have two different intentions.
Service Level Agreement (SLA)
A Service Level Agreement (SLA) is legally binding between a service provider and customer. It defines the level of services the provider is responsible for. It usually specified:
- Response times
- Resolution times
They’ll also include penalties for violations. For example, if a support escalation isn’t responded to within 24 hrs. Not resolved, but just a response.
Master Services Agreement (MSA)
A master services agreement (MSA) is a bit more comprehensive. It establishes the overall terms and conditions of the vendor relationship. Think of the MSA as a Binding Financial Agreement in a relationship. If something happens, the MSA is there as the roadmap.
It’s designed for a long-term relationship and the MSA usually outlines the entire scope of work such as:
- Payment terms
- Length of agreement
- Responsibilities of both parties
The MSA can refer to an SLA or Non-Disclosure Agreements (NDAs). The SLA refers to the services and expectations of performance, while the MSA refers to the overall terms of the vendor relationship.
Advantages of a Master Services Agreement
MSAs can be developed to meet your business’s needs and can include language to apply to all contracts, such as SLAs, and NDAs. They can be as simple as you want them to be, or as detailed as the Commonwealth of Australia Act. Trust us, you don’t need it THAT detailed.
An MSA establishes a mutual trust and a better relationship between the two companies. The contract contains the same terms and conditions.
Companies tend to renew contracts annually and it’s even easier with an MSA. MSAs typically last for years, so when a contract is renewed, the MSA and SLAs are still good under the new contract. Making the contract easier to renew.
Yabbit’s Commitment to You
We know what it’s like to be on the end of SLAs and MSAs. WE make the process as painless as possible when you travel down our Yabbit hole. Yabbit is committed to our business partners, wants to make sure our dealers are set up for success. Let us know if you have any questions. We think of you as part of the family when you join us down the Yabbit hole. Contact us today!