Annual maintenance contracts (AMC)

Types of AMC

Comprehensive contracts usually exclude consumables, physical damage, misuse and certain expensive parts. Write these exclusions clearly.

Pricing an AMC: a worked example

A dealer prices a non-comprehensive AMC for 10 split ACs at an office.

Round to ₹25,000–₹26,000 depending on the market. The key inputs are your real technician cost per visit and a realistic estimate of breakdown calls, which you can only get from your own past job records — another reason to log every service job.

What the contract should say

• Equipment list with model and serial numbers, and location.
• Contract period, start and end dates.
• Number and timing of preventive visits.
• Response time for breakdown calls (for example, within 24 or 48 working hours).
• What is covered and what is excluded (parts, consumables, damage, relocation).
• Fee, GST, payment terms (advance, half-yearly, quarterly).
• What happens if the customer does not pay on time — calls paused, contract ended.
• Renewal terms and notice period.
• Pre-contract inspection: equipment must be in working order at the start, or repaired at the customer's cost first.

For contracts of significant value, have the template checked by a lawyer.

Billing and accounting for AMCs

Most businesses bill AMCs in advance — yearly, half-yearly or quarterly. Points to note:

• AMC is a service, so GST applies on the service under the relevant SAC. Raise a proper tax invoice; see invoices for repair and service jobs.
• If you receive the fee before raising the invoice, GST rules on advances for services apply.
• A yearly fee received in January covers months in the next financial year too. Your CA may defer part of the income to the next year in the books.
• Keep a separate income ledger for AMC so you can see it apart from one-off repairs.

This is general information, not tax advice; confirm treatment with your CA.

Running AMCs day to day

1. Keep a contract register: customer, equipment, start/end date, visits due, fee, payment status.
2. Schedule preventive visits at the start of each month.
3. Log every visit and call as a job against the contract, even if not billed.
4. Get the customer's signature or confirmation on each visit.
5. Review each contract's actual cost against its fee every quarter.

Renewals: where the profit is

The first year of an AMC often has extra work: fixing neglected equipment, learning the site. Renewals are where margins improve. Start renewal conversations 30–45 days before expiry, share a summary of visits and calls done during the year, and adjust the price if actual costs were higher. Losing money on a contract for two years in a row is a pricing problem, not bad luck.

Selling AMCs to the right customers

Not every customer is a good AMC customer. The best ones have several units in one place, depend on the equipment for their business, and value fast response over the lowest price: offices, clinics, restaurants, schools, shops with display lighting or CCTV, housing societies with pumps or solar systems. Single-unit home customers often buy an AMC once and drop it.

The natural moment to offer an AMC is at the end of the warranty or right after a costly repair, when the value of regular maintenance is obvious. Train counter and service staff to mention it at those moments, with a simple one-page proposal ready to share.

AMC jobs with Cashflow OS and Tally

Cashflow OS does not manage contract schedules, but its service jobs module helps with the work underneath: open a job for each AMC visit or breakdown call, add parts or service charges, and close it — invoicing any chargeable parts. Quotations and proforma invoices with your logo and bank details can be shared on WhatsApp for renewals, and party ledgers show what each AMC customer owes. See service jobs.