Top 5 Autotask Contract Billing Tips

In this blog post, I will discuss several key aspects of Autotask Contracts that can help simplify your billing processes. Let’s begin by clarifying the main problem we aim to solve. As an MSP (Managed Service Provider), we typically encounter three types of billing models: Per Hour, Recurring/Subscriptions, and Fixed Price.

#1 – Understand Your Billing Models

With the Per Hour model, we bill based on the “an hour worked is an hour earned” principle, often referred to as Time and Materials (T&M). Recurring/Subscriptions involve billing a fixed rate on a recurring basis. Fixed Price, on the other hand, is a one-time charge usually used for projects or one-off work, such as a fixed price for each workstation installation under an MSP contract.

Given that we are an MSP, it is essential to establish a scalable billing framework. Typically, the billing model can be structured as follows:

1. Recurring Revenue is billed using an Autotask Recurring Service Contract.
   1. Out-of-Contract (OOC) items are excluded and billed on an hourly basis.
2. Fixed Price work is billed using an Autotask Fixed Price Contract.
3. Parts are billed through the Ticket or Project as needed.

#2 – You Can Skip Fixed Price Contracts

While the previous approach works well, I suggest a more simplified method for smaller MSPs:

1. Set up an Autotask Line of Business (LOB) for each billing model.
2. Recurring Revenue is billed using an Autotask Recurring Service Contract.
   1. Out-of-Contract (OOC) items are excluded and billed on an hourly basis.
3. Fixed Price work is billed using an Autotask Charge.
4. Parts are billed through the Ticket or Project as needed.

This approach eliminates the need for Fixed Price contracts by utilizing LOBs and creating specific Work Types for Fixed Price work. In practice, particularly for smaller MSPs, I have found that billing milestones via Fixed Price contracts often entail more effort than they are worth when compared to the benefits gained using my recommended approach.

#3 – You Can Use LOBs to Fine-Tune Financial Reports in Autotask

While I recommend avoiding Fixed Price Contracts until necessary, it is advisable to create Autotask LOBs early on. Over time, relying solely on Contract Categories, Roles, and Work Types can make it challenging to generate precise financial reports in Autotask. Although obtaining the desired data is feasible, you may encounter complications due to numerous included/excluded filters for the various variations.

SeaLevel Operations (now Pax8 Academy) offers an excellent breakdown of Autotask LOBs, and I encourage you to explore their model. It involves creating an LOB for each mentioned billing model and assigning tickets and projects to the relevant LOB. The real advantage here is the ability to build Ticket and Task Categories around these LOBs, which significantly reduces the likelihood of billing errors by your team.

Others, including Ben Spector with Tactical Support Services, recommend using Contract Categories. While Contract Categories can help in organizing your Autotask Contracts, you’ll find that the Contract Categories doesn’t flow through to all of the reporting data available to New LiveReports, whereas LOBs do. That said, Contract Categories are easier to setup and may be more suitable to you depending on your situation.

#4 – Use Per Contact and Per Configuration Item Billing

Autotask Recurring Services require some additional work since you need to update your Autotask CRM with new end-users and then adjust your Contracts accordingly to bill for the newly covered items (or reduce billing, depending on the situation).

By implementing Per Contact and Per Configuration Item billing, the Contract will automatically adjust as you update your CRM, eliminating the need for extra manual work. For instance, if a new user is hired on Tuesday, their next invoice will reflect a prorated charge covering the period from next Tuesday through the end of the month.

One potential drawback of this method is that you must ensure your CRM is always accurate. In my experience, my MSP utilized CloudRadial, which offered excellent syncing between 365 and Autotask. However, there may be other options available as well.

#5 – Set Your Contracts to Start on the 1st of the Month

This aspect is often overlooked but can greatly facilitate billing processes. When a new user begins using Autotask, it is common to set an Autotask Contract to start on the day the actual quote was signed or the date the service commenced.

Unfortunately, this approach can cause future complications. When you make adjustments to contracts, you must ensure that these adjustments are correctly dated. By aligning all contracts to be billed on the 1st of the month, this task becomes much simpler.

To set up an Autotask Recurring Service Contract correctly, follow these steps:

1. (Example) Sign a new MSP contract on the 20th of this month.
2. Create a Contract with a start date of the 1st of the current month.
3. Do not create any Recurring Services using the wizard.
4. Manually add new Recurring Services, effective from the 20th.
5. Allow Autotask to prorate the bill accordingly.

By following this approach, you ensure that all contracts are billed accurately, even when complex adjustments are required in the future.