Microsoft gets 2% discount on invoices

Actional Contract Insight

When negotiating a contract with Microsoft, you should state in some form or language that no discounts will be provided and that the invoiced price is the final payment amount.

You close a $500K deal with Microsoft. After delivery, you promptly submit a  $500K invoice and is processed and paid by Microsoft within 10 days. That was fast. Thank you Microsoft. But wait! Microsoft only sent $490K. $10K is missing. This must be an error. No, its not.

Microsoft is entitled to a 2% discount on all invoices processed and paid within 10 days of receiving them. What?? Its true. You didn't know that did you? Its in the Microsoft Supplier Service Agreement (MSSA). That you signed. Without reading.

....will pay Fees and approved expenses (i) net 10 days less a 2% discount on  the invoiced amount;

- Section 4 (a)  of the Microsoft Supplier Service Agreement

To be fair, its provided as a possible benefit. In return for net 10 (aka faster realized revenue) you provide the 2% discount. So there are startups who would gladly provide the discount. But since its in the MSSA which most companies glaze over ("we can't change it so why bother"), its easily missed.

If you don't want to provide the 2%, you need to reflect that in the SOW (statement of work; aka the Contract) in some way.

Of course, not all contracts done with Microsoft is governed by the MSSA. So this only applies to contracts that are.

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Disclaimer : nothing here is legal advice. Consult a qualified lawyer for legal advice