Service Agreements help commercial service businesses generate consistent revenue and build long-term client relationships, while streamlining scheduling and ensuring accountability through clearly defined terms and expectations.
As part of its Back 2 Basics webinar series dedicated to strengthening your knowledge and skills as a ServiceTitan customer, Senior Program Facilitator Tim Sjobeck covers the fundamental setup of Service Agreements, how they can address common pain points, and the essential management workflows.
The episode examines key differences between Service Agreements and Memberships, tips for configuring Service Agreements correctly, and the essential management capabilities of Service Agreements.
Memberships vs Service Agreements
Sjobeck kicked off the discussion by explaining the key differences between Residential Memberships and Service Agreements, notably that memberships are typical for residential customers while Service Agreements are for commercial clients.
“On the residential side, we're going to look at going out on recurring service once to twice a year. Equipment, it could be anywhere from one to five pieces of equipment. Costs are usually going to be around $100 to $500 per year,” Sjobeck says.
For tags associated with memberships in ServiceTitan, Sjobeck says they include monthly, ongoing, annual, and multi-year.
“On the commercial side with these commercial Service Agreements, we can see that the customer changes,” he says. “We're going to be looking at apartment buildings, industrial complexes, commercial buildings, national chains, and big box stores. Instead of recurring service, we use the term ‘Visits,’ and these are completely customizable. They're monthly, they're quarterly, or multi-day jobs.”
For equipment within Service Agreements, Sjobeck says it’s common to service over a hundred pieces of equipment, depending on the size of the facility. Annual costs to the customer, he says, range from $1,000 to $100K-plus.
When it comes to Visit frequency, Sjobeck explains that memberships typically provide recurring services scheduled just before peak seasons, with uniform tasks like spring air conditioner tune-ups.
He says Service Agreement Visits are more complex and frequent, so the setup in ServiceTitan requires a higher level of customization.
“This accommodates cases where the work performed on each Visit might be identical, or unique based on the season and equipment being serviced,” he says.
Configuring Service Agreements in ServiceTitan
When setting up new Service Agreements in ServiceTitan, Sjobeck mentions two main types of configurations to be aware of: deferred revenue and immediate recognition.
The deferred revenue template focuses on revenue that is not recognized immediately but instead over time, which is crucial for accurate financial tracking.
Sjobeck says setup should include establishing a General Ledger account where the deferred revenue will be tracked. You also need to define how the system should handle agreement cancellations from a business perspective. Then, you can assign the specific services or tasks associated with the agreement and connect your pricebook. Once services are assigned, Sjobeck says you can configure any client-specific pricing or template-specific pricing rules.
For setting up an immediate recognition template, Sjobeck suggests using a tag titled “Time of Service” to differentiate from deferred revenue templates. He says you’ll see fewer configuration options outside of assigning relevant services and tasks, and applying pricing rules or adjustments.
It’s also key to note these configurations determine how revenue is handled on the back end, Sjobeck says, but they’re not directly tied to billing processes at this stage.
Visit Types
Sjobeck suggests building out different Visit templates for each type of service your business provides.
“For example, maybe you're just HVAC, well, you'll probably have four separate fall, spring, summer, and winter Visits,” he says. “Now, if we're doing a boiler or chiller, or maybe a grease trap, as far as the maintenance, I'm going to take the time to build these all upfront as templates. That way when I go to build my Service Agreements, they're all templates, and already set and ready to go from the Visit side.”
Sjobeck says he likes how the dashboard within Service Agreements provides more in-depth analytics and insights compared to the Residential Membership side of ServiceTitan.
“We can see exactly what status this is in. You're going to see your customer, how many locations are associated. The start date. The duration of the actual contract, whether this is auto-renew or not.
“We also have a view history tab, which is kind of a cool pop-out that gives you a little bit more information of what's been happening in this account,” he adds. “Right off the bat, you're going to see that we are into Visit status. It gives you a percentage of completion, and any scheduling notes.”
Accounting
From the accounting side of Service Agreements, Sjobeck says he loves being able to see a real-time view of budgets versus actuals.
“As you perform these services, you can see that we can look at the actual costs that happened when we performed it, and we're going to get that variance, and then when we can track our percentage of budgets used,” he says. “This could be critical if we have more than one or two Visits, so I love that part of it as well.”
Sjobeck says drilling down further into each agreement reveals even more granular financial data.
“This is where those cost estimates that we set up, the labor hours versus our cost equals our total cost and our material costs, and so we can see those and get an actual comparison right here, just like we did on the total service agreement, estimated versus the actual, and the variance.”
Billing
Sjobeck emphasizes that the accounting setup in ServiceTitan operates independently from the billing setup.
“I think that's the coolest thing about Service Agreements. I can control the accounting side of things with the templates, but each individual Service Agreement can have its own customized billing schedules,” he says.
When it comes to the billing in Service Agreements, Sjobeck says a top benefit is he can build, assign, and send invoices without needing to navigate between multiple tabs.
“I can do this all from this location, which makes this more efficient from what we've been used to with workarounds, trying to use Memberships to accommodate traditional commercial Service Agreements,” he says. “You can see your invoice and revenue recognition. We can search by the dates here. We can also look by type, and then what the actual status is, whether it's been exported or posted.”
Ultimately, Sjobeck says highly customizable Service Agreements empower service businesses to scale and handle more complex jobs.
“This is going to give you that capability to, as you grow and scale your business up, Service Agreements will have that capability to get more complex and bigger customers in there, and we can utilize Service Agreements at a completely bigger level.”
Pro Tips on Working with Service Agreements
To wrap up the presentation, Sjobeck shared some of his “Timmy Boy pro tips” on using Service Agreements in ServiceTitan.
Most importantly, he says you need to put in the work upfront.
“Just like most things in ServiceTitan, the more I'm focused on setting up those Visit templates, the easier this is going to be to manage. The better and the more focused I am on setting up the actual Service Agreement, we all know good data in, good data out, right?
“If you set up those templates in the beginning, this is going to put you in a strong foundation to go forward, to where you're just creating the specific Visits and Service Agreements for those specific customers,” he adds.
Sjobeck also advises against using Forms and Checklists not specifically designed for Service Agreements.
“I want to make sure that these Visits are performed correctly, so I'm going to create Forms that are specifically designed for our Service Agreements,” he says. “I want specific job types. The reporting, from job types to business units is huge, but I can also use it from a filtering standpoint as I'm going through the dashboards.”
Finally, Sjobeck suggests being very specific about how you use tags and filters to make it easier to find key information.
“This is going to allow you to dig in and really get granular with the reporting side of things, from just your tags,” he says.
To learn more, check out the full episode Service Agreements 101 on demand.
