Service agreement: what to agree and how to schedule the visits

In brief

• The service interval is agreed for the equipment, and every interval is given a due date and an execution window within which the visit may move.
• The agreement lists the tasks included in a visit and the work billed separately, at the level of the individual task.
• A response time is defined in three parts: where the clock starts, whether the response means arrival or repair, and which service window it runs on.
• A payment period longer than 30 days has to be expressly agreed where the debtor is a business (section 5 of the Act on Payment Terms in Commercial Contracts).

A good maintenance contract states what is serviced, how often and what the price includes. Define response times, spare parts and approval of extra work just as clearly. Planning visits helps ensure the available team can deliver what has been promised.

Use the fillable service report to document visits. It separates work covered by the contract, separately billed work and follow-up actions.

Sites and equipment are the backbone of the agreement

The agreement starts with a list. A site is the customer’s premises where the work is done, and every site has its own address, access instructions and contact person. A piece of equipment is identified precisely enough for any technician to recognise it on site: manufacturer, model, serial number, year of installation and location within the site.

A site and equipment list works well as a contract appendix. Agree on additions, removals and who approves changes. State the price-adjustment basis, such as a unit price per asset. Using an appendix does not itself permit unilateral changes to the contract’s scope.

The interval is agreed for the equipment, not for the agreement

One agreement usually contains several intervals: an annual inspection, scheduled maintenance every six months and a filter change every quarter can all sit in the same agreement. The number of visits per year is the sum of these, to the extent that the tasks cannot be combined into one visit. Combining is always worth it when it is technically possible: the same journey, the same access to the site, the same billing event.

Distinguish the target date from the final permitted service date. A service window could span two weeks either side of the target if the equipment requirements permit it. The window must end by the binding deadline. Agree on an exact visit date when the customer needs one.

A maintenance that was missed is recorded in the same list as the completed ones, with the reason. That entry is exactly what is asked for afterwards, when the equipment breaks down and it is established when it was last serviced. Regulatory requirements for particular kinds of equipment are a layer of their own: they are checked in the rules for that kind of equipment, and the interval in the agreement is set to meet them.

The content of a visit is written at the level of the task

The sentence “the annual service is included” means one thing to the seller and another to the buyer. Record the tasks belonging to the visit as a list:

• inspection and measurements: which values are measured and against which limits
• the tasks of scheduled maintenance: cleaning, adjustments, lubrication, software updates
• consumables replaced every time: filters, seals, belts
• reporting and an entry in the equipment’s maintenance log

Work billed separately is listed in the same detail: repairing a fault, spare parts outside the list, additional work ordered by the customer, a visit caused by misuse and a visit where the technician cannot get into the site.

The third point to settle is what happens when a fault is found during a visit. There are two options: the technician repairs it immediately up to an agreed amount in euros and reports afterwards, or the fault is recorded and the repair is quoted separately. The first saves a second journey, the second keeps the cost in the customer’s hands. Either works when the limit is a figure in the agreement.

An hour quota is a third way to limit the content: the agreement covers 20 hours of work a year, say, and the part above that is billed according to the price list. A quota requires that the hours are recorded on the visit for the included part as well, because it is exactly those entries that show the customer the overrun.

Response time, service window and on-call

A response time is a promise defined by three questions.

Where the clock starts. The most common contract term is the report arriving in an agreed channel. Record the channel in the agreement: a phone number, an e-mail address or a customer portal. A message left anywhere else is a matter for dispute.

Where the clock stops. Agree separately whether the response means contact with the customer, arrival at the site or repair of the fault. These are three different promises, and the last two are worth giving separately: response time four hours, repair time two working days.

During which hours is response time measured? If service hours are weekdays 08:00–16:00, a four-hour response period for a report at 16:30 ends at 12:00 on the next service day. With round-the-clock service it would end at 20:30. Define the response too: contact, starting work or arriving on site. Waiting for parts or a customer decision pauses the clock only if agreed.

On-call outside the service window is priced as a package of its own: a fixed on-call fee and a raised hourly rate, or only a raised rate with no monthly fee. Record as well who on the customer’s side may use the on-call number. The number of call-outs is a cost that a list of names limits.

Pricing: fixed agreement fee, per-visit price and hourly work

Three models are in use, often within the same agreement.

A fixed agreement fee covers the period’s visits and their content in one sum. The risk moves to the service firm, which has calculated the price from the number of visits, their length, the journeys and the consumables. The model works when the equipment is known and there is maintenance history.

A per-visit price prices every scheduled maintenance separately; the agreement sets the price, the interval and the service promise. With a new customer this is the safer starting point, because the condition of the equipment becomes clear during the first year.

Hourly work according to the price list covers fault repairs and additional work. The agreement gives the prices and priority in the queue; billing follows what was actually done.

The price list contains the hourly rate by type of work, the minimum charge per visit, the travel charge in kilometres or by zone, the evening, weekend and public holiday multipliers, and the principle for pricing spare parts. Agree also how often the price list is reviewed and with what notice.

Billing rhythm and payment terms

The agreement fee has three rhythms: in advance at the start of the period, in equal instalments during the period – monthly or quarterly, for instance – and in arrears according to the visits made. A rhythm weighted towards advance payment suits a fixed agreement fee, one in arrears a per-visit price.

For an agreement fee billed in advance, the seller has to give the buyer an invoice. If the whole consideration has not been billed as advance payments, an invoice also has to be given when the service has been performed; the clearest way is to bill only the remaining amount or to record the earlier advance payments as a deduction with references (Tax Administration invoicing guidance, point 4.2.6).

The payment period has a provision of its own: under section 5 of the Act on Payment Terms in Commercial Contracts, the payment period may exceed 30 days only if that has been expressly agreed, where the debtor is a business. On an overdue amount, penalty interest is payable under section 4 a of the Interest Act at eight percentage points above the reference rate in force at the time (section 12 of the Interest Act; the Bank of Finland publishes the reference rate every six months).

The line on the agreement invoice has to say which period and which sites the fee covers. Additional work is billed after the visits on lines of its own, so the customer sees the difference between work included in the agreement and work ordered separately; the chain from the visit to the invoice is described in the guide from work order to invoice, and the details on the invoice in the guide mandatory invoice details.

Agreement period, termination and price changes

An open-ended contract continues until ended under its terms. A fixed-term contract ends with the agreed period unless extension or automatic renewal has been agreed. State notice periods, renewal duration and where notices must be sent.

A mechanism is agreed for a price change: either a review tied to an index or a notice from the service firm a set time before the change. A common demand on the customer’s side is the right to terminate the agreement if the increase exceeds an agreed limit. The term is worth granting in writing, because it removes the negotiation at every increase.

Agree also on what happens when the agreement ends: to whom the maintenance history and the measured values are delivered, in what form and within what time, and how keys and access passes are returned.

Responsibilities and the customer’s obligations

The service firm is responsible for the quality of the work, the qualifications of its technicians, occupational safety for its own work, and for the agreed tasks being done within the agreed time. The customer’s obligations are recorded just as precisely, because they decide whether the visit succeeds.

• Access to the site at the agreed time. Keys, access passes, door codes and the contact person are named per site. Agree the cancellation deadline and that a visit driven in vain is charged as the minimum charge.
• Operating conditions and daily tasks for the equipment. Some of the tasks belong to the user: cleaning the filter, acknowledging alarms, reporting an unusual noise.
• Reporting a fault without delay in the agreed channel. A fault reported late has time to cause further damage, and how that is shared is settled by the wording of the agreement.
• Risk information about the site. Hot work permits, the isolation procedure for electrical work, hazardous substances and the site’s own safety instructions are delivered before the first visit.
• The customer’s own maintenance records. The service firm produces an entry for the visit; the holder or owner of the equipment keeps their own records up to date.

Placing the visits into the year and the capacity

An agreement portfolio is a commitment that has to fit into the technicians’ working hours. The year is planned in four steps.

1. Fix the season-bound visits first. Cooling equipment is inspected before the summer, heating before the frost, ventilation filters after the pollen season. These visits do not move, so they take their space in the calendar before the others.
2. Spread the rest across the months according to capacity. Add up the estimated hours of each month’s planned visits and compare them with the technician hours available, with holidays and public holidays deducted. Leave part of the time for fault calls: in an agreement portfolio with a response-time promise, a fully planned month means late scheduled maintenance from the first day with a fault onwards.
3. Group nearby sites. Combine visits when duration, capacity and agreed service times permit.
4. Agree on timing that suits the customer. A window adds flexibility; an exact time helps preparation. Confirm it sufficiently early.

Go through the yearly plan with the customer once a year, preferably alongside the summary for the period. That is also when the customer’s own closures, renovations and production shutdowns come out, the ones that otherwise collide with a planned visit.

What is reported to the customer about a visit

A work report is delivered from the visit: the tasks done, the measured values as figures, the parts replaced, the hours used, the deviations observed and a recommendation for what to do next. The customer signs off the report on site. A signed-off report stays unchanged, and a correction is made as a new version. That is the whole answer to the situation where, three months later, the course of the visit is remembered differently.

The measured values are worth recording in fields of their own rather than as free text, because their value comes from comparison: the same value from the previous visit says which way the equipment is going.

The summary for the period is a different document, and it is compiled for the agreement’s own period: scheduled maintenance completed and overdue, how the response-time promise was met, recurring faults by equipment and recommendations for the next period. Include the overdue maintenance – a document that lists only the successes is a brochure. The summary is also the best material for the negotiation where the price or the service interval is reviewed.

The agreement decides

In a service agreement the parties agree almost everything themselves: the content, the intervals, the response time, the pricing, the period and how responsibility is shared. A written agreement with its appendices settles a dispute, and a practice that differs from the agreement is worth recording as an amendment rather than left to live on in e-mails.

An agreement can come into being before anyone signs a piece of paper. Under section 1 of the Contracts Act, an offer to make a contract and the reply given to it bind the party who made the offer and the party who gave the reply. An accepted quote with its appendices is therefore the agreement that is followed, so the same limits are written into the quote as into the agreement text itself.

Some things come from outside the agreement. The mandatory invoice details are laid down in section 209 e of the VAT Act, and they are the same whatever has been agreed about billing. Regulatory requirements for particular kinds of equipment bind the interval downwards: an agreement can call for visits more often than the rules require, not less often.

Example: a service agreement covering three sites

The customer has three sites in the same city. The agreement covers the scheduled maintenance; fault repairs and spare parts are billed according to the price list.

Agreement visits come to seven a year. In the year’s calendar they are placed according to the season and the area.

The year’s billing consists of the agreement fee and work outside it. The agreement fee is billed quarterly at the start of the period, additional work after the visits. The sums are example figures excluding VAT.

The fixed agreement fee is 77 per cent of the year’s billing. That share says how predictable the customer is: the larger the fixed part, the more precisely the service interval and the content of the visit have to be set.

Checklist

Checking a service agreement before signing.

• The list of sites and equipment is an appendix and every item of equipment is identified by manufacturer, model and serial number; the procedure for adding to and removing from the list has been agreed.
• The service interval is recorded per item of equipment, and the number of visits in a year has been calculated from those intervals, taking into account what can be combined.
• The target, service window and final permitted date are distinct, and the window does not exceed the binding deadline.
• The tasks included in the visit and the consumables always replaced are listed at the level of the task.
• Work billed separately is listed in the same detail, and the limit in euros up to which a fault is repaired during the visit without separate approval is recorded.
• The response time is defined in three parts: where the clock starts, whether the response means arrival or repair, and in which service window it runs.
• The price, the channel and the authorised people for on-call have been agreed.
• The price list is an appendix: hourly rate by type of work, minimum charge, travel charge, evening and public holiday multipliers, and the principle for pricing spare parts.
• The billing rhythm and the payment terms have been agreed, and a payment period over 30 days is expressly recorded where such a period has been agreed.
• The agreement period, the notice period, continuation and the procedure for a price change with its notice times are recorded.
• The customer’s obligations are recorded: access to the site, the contact person, the cancellation deadline and the charge for a visit driven in vain.
• Reporting has been agreed: what is delivered from the visit, to whom and within what time, and what the summary for the period contains.