A Master Services Agreement provides the foundations for a commercial relationship and seeks to make contract negotiations simpler and faster. Use our free Master Services Agreement template to create your own.
A Master Services Agreement (MSA) is a contract between two or more parties that formalizes the terms and conditions of their ongoing relationship, both in the present and the future.
Unlike some other business contracts which seek to govern a one-off transaction or single interaction between parties, an MSA seeks to provide details about obligations and responsibilities in a long-term relationship and provide some flexibility for these to evolve with time. It usually covers the main points within a deal, what each party expects from the other and how to approach potential conflicts if they were to arise.
More often than not a Master Services Agreement is appended to an order form, and it may also refer to separate legal agreements, like DPAs and SOWs. However, the MSA provides the basic framework upon which a commercial relationship can be built, hence their frequent use in high-velocity sales organizations.
The purpose of a MSA is to simplify the negotiation process when drafting contracts with the same party in the future.
Since a Master Services Agreement outlines the fundamentals of a business relationship and establishes how two parties intend to work together early on, this makes it significantly easier to agree on the finer details involved in future transactions. In turn, this reduces lengthy contract negotiations, speeds up the contract review process and prevents bottlenecks in your contract workflow.
Not only that, another benefit of having a Master Services Agreement in place is that it prevents disputes later in the relationship as most of the important decisions have been ironed out before the contract’s effective date.
Owing to how broad MSAs tend to be, and how frequently they’re used in fast-growth companies, Master Services Agreements tend to touch stakeholders right across the business. Here’s how:
It goes without saying that, given the purpose of a contract and the key requirements that make one binding, a Master Services Agreement should clearly outline each party’s contractual obligations and responsibilities. This information provides the foundation for the contract and ensures that both parties are familiar with one another’s expectations.
MSAs ought to outline the specifics of the product or service’s delivery. This means that both parties have discussed and agreed on the delivery terms, including but not limited to when the delivery is due to be made, who is responsible for delivering it, where it will be delivered to and how. This provides some certainty around each parties expectations and reduces misunderstandings throughout the duration of the contract.
A Master Services Agreement should also establish clearly how payments will be made and when. This ensures that there’s no confusion between parties about what to expect regarding payment. This section of an MSA will usually spell out the standard rate, the method of payment, and the amount due, as well as other details, like the time it needs to be paid.
It’s also common for a Master Services Agreement to include some more general matters, like intellectual property rights. This section generally reiterates how rights over patents, copyright, design rights and other confidential information are to be protected, and which intellectual property rights are reserved for which party. This information will prove particularly useful as goods and services change hands.
Whilst Master Services Agreements are typically designed to provide some flexibility within long-term business relationships, they do still need to provide certainty around the implications of certain events, like a breach of contract.
In particular, they should establish what constitutes a breach, what should happen in the event of a breach, and how this breach of contract will be compensated in the unlikely event that it does happen.
Like most commercial contracts, MSAs will typically outline a clear dispute resolution process for parties to follow in the unfortunate event of a dispute or contract breach. This should outline which actions will be taken and which jurisdiction’s laws any disputes or claims will be governed by.
Most MSAs will include a section about how a customer’s data will be used and for which purposes it will be processed. They will usually also cover how this relates to the relevant and applicable data protection laws. This will often be similar to the information contained within a privacy policy, but shorter.
It’s commonplace for an MSA to be used in conjunction with another type of contract, whether this is a Service Level Agreement (SLA), a Statement of Work (SOW) or a different agreement. To find out more about how an MSA works alongside a SOW, check our our MSA vs SOW comparison.
Most legal and business teams see the MSA as a perfect opportunity to establish some additional expectations relating to these contracts, as well as outlining some terms regarding future relationships.
Without automation, the process of agreeing an MSA can be drawn out and painful.
Typically, legal counsel will, at some point, save a version of a Word template on a shared drive. When a deal is ready to be closed, a salesperson will download a version of the MSA template - which may or may not be the most current - and amend its terms, depending on what was agreed with the customer.
They then send it via email to legal for review and amends; this may involve a few rounds of back-and-forth. It will then be emailed to the customer for agreement, alongside the order form. Changes can be requested at any point, creating a parallel version, likely without the full audit trail of everything that went before.
Once fully signed, either with a wet signature or via electronic signature, copies are emailed individually to stakeholders (who may include sales, legal, finance, project management teams, and of course the customer).
This process is still typical, but companies with a richer tech stack may have made some small steps forward. The template might be a shareable Google document; versions might be sent internally using Slack; and once e-signed, details might be manually entered into a CRM system like Salesforce.
All in all, this process for managing MSAs is inefficient and creates friction for the parties involved. It can take up to five separate tools just to agree a simple Master Services Agreement. For businesses scaling quickly, this quickly becomes time-intensive and unmanageable.
At its worst, the manual contract process for agreeing and managing MSAs can block deals and subsequently slow down your company’s growth. In fact, teams that are yet to automate their contract workflow for MSAs typically report the following pain points:
Fortunately, contract automation software has transformed the way many scaling companies manage their Master Service Agreements. In fact, Juro users report an end-to-end time saving for their automated sales contracts, including MSAs, that ranges from 75 to 96 per cent.
This is what a more efficient and automated workflow for managing a Master Services Agreement looks like:
Legal counsel still own the MSA templates. However, instead of creating new Word versions to update an MSA and redlining each individual agreement then hoping that sales users find it, legal can simply create one automated template that sales teams can use to self-serve on contracts in the future. This means there are no alternate versions with which sales can confuse it and legal teams to return to higher-value work.
To really enable sales, automation needs to be about self-serve. With confidence in the currency of the MSA template and control over it, legal counsel can empower salespeople to generate their own MSAs from the defined, approved contract template.
One of the fastest ways to achieve this is for the automation tool to guide users through a Q&A flow, the answers to which autopopulate the MSA with the correct data. Even better, sales teams can also integrate their MSA template with Salesforce or whichever CRM the requestor of the MSA uses. This means that all of the relevant data can get pulled into the contract template automatically and populate it without manual input.
Unlike a manual contract workflow whereby a Master Services Agreement is trapped in a static Word or PDF file, Juro’s contract automation software makes MSAs fully collaborative.
Users can tag counterparties to flag certain clauses to them, leave internally and externally facing comments and edit the contract in Juro’s rich text editor in real-time.
This makes it easy for any contract stakeholders to engage in contract negotiations without friction, and all in one place. Contract negotiation no longer needs to be reserved for contract managers and contract administrators. Instead, each relevant party can approve certain aspects of the contract quickly and with ease.
Legal counsel can retain control by having approval rights before contracts go for signature. These approval workflows are common in contract management systems, and they ensure legal has oversight, without putting too much friction in the process. Other stakeholders, like sales managers, project teams and IT teams, might also need to approve.
Authorised contract signatories could range from sales managers to CEOs depending on the size and structure of the company. If an automated workflow offers native eSignature, then authorized signatories can quickly and securely sign deals that have received legal approval.
This makes it easier for contract signatories to get a Master Services Agreement over the line without needing to be physically present.
Fortunately, contract automation can improve the MSA contract workflow in various ways, which you can find out more about in our Mentimeter case study. But to achieve this, you need a robust contract tool in place.
Users looking to end manual processes for MSAs typically look for the following value areas from an automation provider:
Legal will often want to define MSAs at template level and prevent their sales teams from departing from the latest terms. In Juro, users can set up permissions and customize what can and can’t be amended within a Master Services Agreement.
Users will also benefit from approval workflows, with defined roles for legal and CFOs, as well as signatories. The best approval workflows are ‘sequential triggered’ which means multiple approvers can be notified in a specific order. This prevents users from departing from standard terms in simple contracts and gives visibility to those who need it.
Contract smartfields are another useful feature for MSAs. These contain contract metadata, making sure key fields (like dates, values, names, addresses and so on) are tracked and searchable. They should also live-sync with CRM bi-directionally to make sure data is always accurate. All of this data is then captured and can be used to filter contracts in a contract repository.
Contract stakeholders benefit from being able to set up alternative clauses and fallback positions in contract templates using conditional logic. Contract tools can provide certainty around these things by automating your contract playbook.
If standard terms are to be varied, it’s useful for internal stakeholders to be able to collaborate in real-time on the document, without needing to worry about audit trails and version control. In Juro, parties can hide comments from external parties and track contract edits in real-time.
Counterparties need to be able to negotiate an MSA without having to move into Word and lose audit trails and data. In Juro’s contract software, contracts no longer need to be redlined in the traditional way. Instead, users can add comments, suggest changes and discuss terms in our intuitive comment threads.
Approvers and signatories often want to scroll back through negotiated versions to keep track of changes and variations. Juro provides a detailed audit trail highlighting when contracts have been viewed, edited, signed and shared, helping commercial teams track contracts as they progress through the contract lifecycle.
Only a two-way integration with live data sync can ensure that data is accurate across both contract and customer relationship management. This helps to avoid double-work with data entry and eliminate any costly discrepancies.
Are you ready to join the high-velocity sales teams taking the pain out of MSAs with Juro? To find out more about how Juro’s contract automation software can reduce contract admin by up to 75% and improve your supercharge your MSA contract workflow, hit the button below.
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