Definition
A service level agreement (SLA) is a contract, or part of one, that defines the measurable standards a service provider commits to, such as uptime, response times, and resolution times, and what happens if they are missed. SLAs often include service credits, which reduce the client's invoice when targets are not met.
Also called: SLA, Service level
Service level agreement in practice
If an SLA includes service credits, apply them on the next invoice as a clearly labeled discount or credit note line, referencing the period and the missed target. Doing it proactively builds trust.
Frequently Asked Questions
What is a service credit?
A reduction in the fee, often a percentage of the monthly charge, that the provider gives the client when it fails to meet an SLA target. It usually appears on the next invoice.
Do freelancers and small agencies need an SLA?
For ongoing services like website maintenance, hosting, or IT support, a simple SLA that sets response times and support hours prevents arguments about what "urgent" means. Only promise targets you can reliably meet, and keep credits modest.
Related terms
- Master services agreement A master services agreement (MSA) is a contract that sets the general terms for an ongoing relationship between a client and a service provider, such as payment terms, confidentiality, liability, and intellectual property.
- Credit note A credit note is a document a seller issues to reduce or cancel the amount owed on a previously issued invoice.
- Recurring invoice A recurring invoice is an invoice that is generated automatically on a fixed schedule, such as monthly or annually, with the same client, line items, and terms each time.
- Scope of work A scope of work is a written description of exactly what a project includes: the deliverables, tasks, timeline, assumptions, and exclusions.
This page is for general information only and is not legal, tax, or financial advice. Rules change and vary by location, so consult a qualified lawyer or accountant about your situation.