Service credit. The number that makes an SLA real.

A typical buyer-side ask is 5 percent of the affected service line fee for each period in which the SLA is missed, escalating to 10 or 15 percent for repeated misses inside a rolling window. Sellers often counter with a cap that limits total credits to a small percentage of the annual service fee. The negotiation is over the ceiling, not the existence of the credit itself.

The mechanism matters as much as the percentage. Credits should apply automatically against the next invoice rather than requiring the buyer to claim them. Measurement should be performed by the seller and reported in the monthly governance committee pack, with the buyer's right to verify. A miss should be defined by the metric in the service schedule, not by reasonableness language that gives the seller wide latitude. Force majeure carve outs are reasonable. Best efforts carve outs are not.

Credits exist for two reasons. They compensate the buyer for the operational harm of poor service. More importantly, they put a price on seller underperformance that aligns the seller's behaviour with the buyer's interest. Without that price, the seller's economic incentive is to staff the TSA at minimum cost. With it, the calculus shifts.

Where the term appears

In the service level section of the TSA, immediately after each defined performance metric. In monthly invoices, where applied credits show as a reduction line. In governance committee minutes, where SLA misses and applied credits are tracked. In dispute resolution submissions, where a pattern of credits supports a buyer's right to terminate a service line for chronic failure.

Related terms

SLA · Service Catalog · Governance Committee · Transition Services Agreement · Workstream