how to craft a service level agreement

bonus: a sample checklist.

by penny breslin
it’s not just the numbers

anytime there is a business relationship between entities, expect to see a contract or some form of written agreement. in outsourcing, as in many other relationships, this is called a service level agreement (sla). this agreement is used to establish the scope of the engagement. it clearly states who is responsible for what, when, where and how. it provides a quid pro quo that you can verify with the business owner(s), so that both parties are fully aware of their obligations.

more: three examples: pricing your bos value add | how to assess needs for a client proposal | best practices for source doc permissions and handling | every back office support client needs a playbook | strengthen client ties with workflow tools | understand your online marketing options | narrow your prospects by choosing a vertical | build your team, then choose your clients | how back office support adds value
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the important thing is to go through each function and each area with the business owners(s), have them read it with you together and check off each item so that they are clear on what you expect from them, and so you are clear on what deliverables you are promising.

this is critical to getting full buy-in, so have all the decision makers in the room.

if they are not all together, come back another time. if you impressed them by now, they will make sure it happens. you cannot take on this kind of work without clarity of purpose and defined scope. the checklist in the sla, if referred to often, updated and known to all your team, will keep scope creep to a minimum. scope creep will make the sale of the value-added services of little value, and obliterate your ability to standardize.

your own team will be just as much of an issue here as the client. as the leader you have to keep this vision in front of everyone.

goproposal makes sla setup and proposal writing easy. i have included a sample sla at the end of this post.

after listing all the work that needs to be done in the calculation excel file, we found the firm cost to be $1,103 per month. this includes the monthly fees for xero and the sync software but not the fees for vend, shopify or bill.com. in this instance, those fees of $137 per month are billed to the client by each vendor separately. after we mark up our fees, the final monthly cost to the client is $2,343. monthly fees to the firm are $2,206.

there is wiggle room here and the cost may seem rather high but remember what you are providing: real-time support and managerial reports. this amounts to $570 per week for the client. if you cannot find some savings that meet that $570 in all the muddled data from the quickbooks file, we would be surprised. this is one company with a cfo already in house. they appear to be making money, but the owners are not sleeping well at night for fear of not knowing. what is the value of a good night’s sleep?

when i have presented this to cpas they always make the end a higher number. go for it, just make sure you follow through with what you promise. because a good night’s sleep is highly valuable to a business owner.

calculations

 

 

 

service level agreement sample checklist 

between:              [bos]

and:                          [client: __________ ]

services and deliverables to be provided to client by provider:

• reconcile all bank and ap and ar accounts on a monthly basis
• sync payroll to accounting software
• allocate incoming vendor bills against case/projects
• verify daily deposit totals against case/projects
• sync time against case/projects
• create weekly ap report for cfo
• pay approved ap weekly
• keep p&l case/project
• wholesale qbo plus app
• wholesale timesheets app
• ledgersync at cost

services excluded:

• provider will have no direct access to dispense funds for client beyond approved ap
• provider will not move beyond above-mentioned work levels unless and until client approves written request
• all service, updates and backups of saas systems provided by vendors

service levels (i.e., performance standards) and remedies:

provider

• provider will assure that trained, qualified staff is available at specified times (9:00am-5:00pm est), or until needed, to complete the anticipated delivery date (add) of each task assigned
  • first 3 months of service to include training of client on saas product use
• provider will supply training material in an online format retrievable by the client from provider’s portal
• provider will complete all assigned tasks within stated add
  • if add cannot be met, provider’s personnel will notify client via slack or sms of expected delay
• provider’s staff will notify client via slack when data and source files are not accessible
• provider will supply staff with secure, high-speed access to client saas software
• provider will cover all overhead costs of personnel and personnel access to internet
• provider will keep pdf copies of reports on portal for download by client on demand

client

• client will establish anticipated delivery date (add) of each task assigned to personnel
• client will authorize access for provider to institution performing ap solution
• client will supply provider staff with copy of client procedures as they relate to task submissions that client requires specific followthrough on
• client has reviewed and understands the business procedural checklist
• client will be responsible for obtaining and/or providing access to required data, apps and source documentation needed for fulfillment of tasks
• client will train provider staff on use of required software not on provider’s current list of recommended software
• client will supply provider with all third-party it support emergency contacts for software not standard to provider’s work environment
  • name:______________ email:______________
• client will allow provider to self-pay for monthly services within 3 days of invoicing
• modification of service levels from initial levels upon execution after conversion to provider operations
• provider will meet with client on the third tuesday of each month at 10:00 am to review work and discuss company financial issues
• provider will supply client with monthly invoices on the third day of each month for the previous month’s work
• provider staff will maintain set of processes established by client and provider for continuity of work process, knowledge and flow
• provider staff will update all changes to client’s internal procedures for sharing across teams and ensuring continuity of process
• client staff will set timetable and parameters for new assigned task types

milestones and project schedules (time-phased, person-loaded)

• client will contract for [20] hours per month of time. said hours will be managed by assigned team leader and multiple personnel* can be utilized to fulfill task in required time up to [20] hours monthly (*may require additional access points)
• at end of second month of work, provider and client will meet to discuss scope to date
• at end of third month, provider and client will meet to discuss client’s ongoing needs

scope of provider’s authority

• provider will supply infrastructure for provider staff to access client saas and source documents
• provider will be responsible for initial software training of provider personnel
• provider will support client staff on developing procedures
• provider will train client staff on cultural and communications protocols with provider staff
• provider will supply support for client on processes
• provider will maintain a pool of qualified staff for client to access

scope of client’s authority

• client will send detailed access instructions and/or access times for provider personnel to enter saas to accomplish required task
• client will provide access codes for downloads of source documents to enable provider personnel in the completion of assigned tasks to meet established add

term of agreement

• renewal periods
  • a one-year contract with a 30-day cancellation policy
• automatic renewal
  • client and provider will sign a new annual agreement

personnel

provider staffing requirements:

• off client site:
  • provider guarantees committed accountant or bookkeeper
  • accounting team leader will occasionally reallocate tasks to preparer under provider’s control
  • provider can change team managers and team leaders with required notification to client
  • client can request change of team leader
  • provider and team leader can change preparer
• specific obligations of provider regarding provider personnel
  • confidentiality – all provider staff sign nda and confidentiality clause
  • non-compete – all provider staff sign a one-year non-compete clause
  • succession planning – all provider team leader and staff cross-train for purposes of ensuring continuity of work
• mix of staff levels – team leader personnel are trained on the appropriate u.s. accounting and bookkeeping requirements

client staffing requirements:

• client will have dedicated staff member internally for reason of tasking and communicating to provider
• client will allow for updating of training of provider staff
• client will ensure timely response to provider’s staff member queries

provider intellectual property

• license to use/included as part of services
  • transfer client name
• license with respect to termination
  • available and included in flat monthly fee for duration of contract

third-party services

• client to assign direct url for provider staff access to all internet points needed to obtain source documentation
• client responsible for cost of third-party services
  • exception: monthly fee for [2] users on xero is included in services

management of projects and other services

• appointment of project managers by provider and client to be principal liaisons between parties
  • osc (outsource coordinator) client
  • bkm (lead bookkeeper) provider
• respective roles of parties (e.g., establishing priorities)
  • osc coordinates tasking due dates if adjustments are needed
  • osc makes sure source documentation is provided to meet client’s add
  • osc communicates issues and problems with bkm
  • bkm communicates with provider
  • bkm is staff representative during internal client meeting when provider bos not available
• management planning
  • bkm will set priority levels of tasking
  • bkm will train provider staff on new software and special project needs
  • bkm will assist osc with any additional training
  • acceptance testing of provider deliverables
  • a three-month test of bos services

client responsibilities

• establish priorities of tasking
• delivery of data and source documents
• training: specific firm requirements for work
  • additional new software (fill in software)
• forms/documents/access and feedback

 confidentiality obligations

• client business information/data
• provider business information
• intellectual property of either party or its licensor

client data

• security
  • saas cloud applications hosted in a soc 2-compliant environment
  • client can utilize provider it staff for initial setup of access to client saas software
  • client to notify provider it and support staff of client’s 24/7 internal it support
• right of client to maintain all controls of data
• backup procedures
  • saas providers maintain data
• provider ensures redundant backup and disaster recovery of items on provider workflow software and dms

procedures to change scope of services

• client has right to change priority or scope of provider’s services/effect on rights and obligations of both parties
• procedures for requesting changes to provider’s services
  • client contacts provider bkm assigned to account
• different performance standards for changes
  • tbd

conversion services

• development of a plan to convert from client’s procedures to provider’s procedures to provide services
• provider staff will maintain and update client procedures as they relate to assigned tasks
• rights and obligations related to performance standards
  • client has obligation to review completed work in timely fashion and provide feedback
• provider is obligated to notify client when changes in staff or access occur

fee structure

• fixed time – 20 monthly hours at rate of $xxx.00 per month
• late fees/payment and billing/disputed amounts
  • see contract

liability issues

• limitation of liability
  • provider ensures security of off-site staff at their location
  • provider ensures security of off-site staff from login at provider onshore facility if required
  • provider ensures security of workflow software
  • provider control of access stops at client request
• warranties regarding services/products/personnel
  • provider goes through normal interview process with staff
  • provider has bkm staff work a minimum of one full year under high security before releasing them to client access
• disclaimer of warranties
  • provider does not control nor support client terminal server access
  • provider does not control or support standing it hardware or software at client site

termination

• client must go through exit interview before termination
• client must give 30 days’ notice to billing department before termination is effective
• provider can terminate client at any time

 sharing of computer resources

• use of resources other than client purposes – none
• use by client (if less than a full outsourcing) – at client’s discretion

dispute resolution

• escalation plan will be outlined for each side
• client escalation
  • bkm
  • provider customer support
  • client managing partner
  • provider management
  • client owner
• provider escalation
  • provider customer support
  • prp
  • client managing partner
  • provider management

restriction on hiring of other party’s personnel

• providers’ personnel in office will not solicit client or client’s end users for any additional work beyond scope as defined in proposal and confined to systems developed by provider and client
• client will not solicit provider’s staff for any additional work beyond scope as defined in proposal and confined to systems developed by provider and client

disaster recovery

• as designed by provider security documentation
  • provider only liable for items posted on provider-shared workflow tasking software

audit issues

• audit of tasking and work process done by client and provider at set times. see milestones section above

most favored client

• client provides timely feedback and utilizes purchased time and then some
• client sees this bos team as part of their internal work structure
• client works on change management internally to facilitate the use of providers’ bos team

posted on february 6, 2024