The Autotask Contract Configuration That's Quietly Killing Your MSP Margins

There's a good chance you're hemorrhaging money right now, and it's not because your techs aren't productive, it's because Autotask is configured to treat billable work as free labor.

I've seen MSPs lose 15-30% of their potential revenue to misconfigured contracts. The work gets done, time gets tracked, but somehow it never makes it to an invoice. Your techs are busy, your clients are happy, and your margins are quietly evaporating.

Here's how to find the revenue leaks and plug them.

Contract Feature Settings That Create "Free Work" Categories

Autotask's contract system is powerful, but its default configurations often work against profitability. The biggest culprit is how contract features handle exclusions and work type assignments.

By default, only Time & Materials and Recurring Service contracts are activated. This seems reasonable until you realize that work falling outside these contracts simply disappears into the billing void.

The exclusion trap works like this:

• You set up a Recurring Service contract as the default
  
  
• You exclude "Emergency/After Hours Support" because it should be billed separately
  
  
• But you forget to assign an exclusion contract for that work type
  
  
• Result: Emergency work gets tracked but never billed

Check your contract exclusions immediately. For every excluded work type or role, you need an exclusion contract assigned. No exceptions.

To audit your exclusion settings:

• Open each active contract

• Click the Exclusions tab

• Verify every excluded item has an assigned exclusion contract

• If not, either assign one or remove the exclusion entirely

Missing exclusion contracts are profit killers masquerading as configuration options.

Time Tracking Configurations That Make Billable Hours Disappear

The time tracking configuration in Autotask distinguishes between customer-facing time (tracked with work types) and internal time (tracked with internal time codes). Get this wrong, and billable work becomes internal overhead.

Common time tracking mistakes:

• Work types assigned to internal time codes: Administrative work types like "Documentation" or "System Maintenance" often get misconfigured as internal time. If these should be billable to clients, they need proper work types, not internal codes.
  
  
• Missing work types for billable activities: New service offerings often start without dedicated work types. Techs default to generic categories or internal codes, making the time unbillable.
  
  
• Timesheet approval gaps: Time entries that don't appear in the Approve and Post workflow won't generate revenue. This happens when work types aren't properly configured for contract billing.

Audit your work types monthly. If techs are spending time on client work but using internal time codes, you're giving away labor for free.

Quick fix checklist:

• Review internal time codes for client-billable activities

• Create work types for any billable service currently tracked as internal time

• Verify new work types appear in contract billing workflows

• Train techs on when to use work types vs. internal codes

Service Bundle Settings That Undermine Profitability

Service bundles should increase margins by packaging related services at premium rates. Instead, many MSPs accidentally configure bundles that cannibalize higher-margin individual services.

The problem starts with service period types. Mix monthly contracts with quarterly services, and you create billing complexity that often resolves against your favor.

Best practice violated most often:Making contract periods and service periods different. I've seen MSPs set up monthly contracts with annual services, then wonder why their cash flow is unpredictable and their billing is a nightmare.

Bundle configuration mistakes that kill margins:

• Overlapping service definitions: When bundle services overlap with standalone services, clients naturally gravitate toward whichever option gives them more for less
  
  
• Inconsistent period types: Monthly bundles with quarterly individual services create arbitrage opportunities for price-sensitive clients
  
  
• Missing cost tracking: Bundles without proper cost allocation make it impossible to identify which services are profitable

The solution is disciplined service architecture. Define clear boundaries between bundled and standalone services, use consistent billing periods, and track costs at the service level.

For Recurring Service contracts specifically, the official documentation recommends making contract and service period types identical-monthly, no exceptions. This isn't just best practice; it's margin protection.

Approve & Post Workflow Gaps That Let Revenue Slip Through

The Approve & Post workflow is where time entries become revenue. Any gap in this process is money lost forever.

Most common workflow gaps:

• Time entries stuck in draft status: Techs complete work but forget to submit time entries, leaving them in draft indefinitely
  
  
• Approval bottlenecks: Single approvers create backlogs that delay billing and hurt cash flow
  
  
• Contract assignment failures: Work completed without proper contract assignment never appears in Approve & Post
  
  
• Service-level security restrictions: Overly restrictive security settings prevent techs from assigning services, forcing manual cleanup later

Revenue recovery tactics:

• Weekly draft time audits: Search for draft time entries older than 48 hours and follow up immediately
  
  
• Multiple approver assignments: Never depend on a single person for time approval
  
  
• Default contract automation: Every client should have a default contract to catch unassigned work
  
  
• Service assignment training: Techs need to understand service selection, not just time tracking

The workflow gaps compound quickly. A week of missed time entries becomes a month of unbilled work, which becomes write-offs when contracts expire or clients dispute old charges.

Plugging the Revenue Leaks

Your contract configuration audit should happen quarterly, not annually. Set calendar reminders to check:

• Contract exclusions have assigned exclusion contracts
  
  
• Work types align with billable service categories
  
  
• Service bundle definitions don't overlap with standalone offerings
  
  
• Approve & Post workflows clear completely each billing period

MSPs typically discover 10-20% more billable time just by fixing contract exclusions and work type assignments. The bigger wins come from systematic workflow improvements that prevent future leakage.

Configure your contracts to protect margins, not just track time. Your profitability depends on it. Let's fix your contract configuration before another billing cycle slips through the cracks. Book a demo now!