Almost every software business I advise runs on services provided by other companies. Cloud hosting, payment processing, messaging and AI services all come with terms covering performance and what the provider is allowed to change, and those terms decide what the startup can safely promise its own customers. For that reason, I think they are worth reading carefully before customers start relying on the product.
This review works best when it is done with the engineers who build and run the service, because they know how the service is actually used and what moving to another provider would involve, while the contract shows what rights the company has if something goes wrong. Looking at both together helps the company choose a provider it can work with and, if necessary, leave.
Find the terms that govern your account
The agreement with a provider usually consists of an order form and online terms, with separate acceptable use and data processing policies. The precedence clause shows which document applies if they conflict, and the company should save the versions it accepted, because the provider's website will show newer terms later.
The company should also check that its plan allows production use and the way its customers will access the service. If it plans to resell the service, it needs terms that allow resale, and it should remember that many developer and trial accounts only permit testing, which is not a sound basis for a commercial launch. If an agency or reseller set up the account, the company should find out whether its contract is with the intermediary or with the provider, and who is entitled to raise support requests.
Payment providers perform different roles, since some only route transactions while others hold and settle funds. The settlement timetable and chargeback rules should be read, including the company's access to funds after termination, before the company tells its customers when they will be paid. In Nigeria, the company should also check that the provider holds the right CBN licence for the role it performs.
Understand how the bill grows
Usage‑based pricing needs to be estimated on the basis of how the product will actually run, including repeated requests and data storage. Charges for moving data out of the service also apply when the company migrates to another provider, so they should be counted as part of the cost of leaving, and an estimate based on real usage shows whether the starting price will still be affordable with many more customers.
Spending limits are only useful if the team knows what they do, since some send an alert while others stop the service. The chosen setting should be tested, and the company should decide who receives alerts and who can approve additional capacity.
For minimum commitments, the company should work out what it would pay if growth slows or it needs to leave early. For a Nigerian company paying in dollars, exchange rate movements and VAT on imported services also affect the real cost, and the renewal date should be recorded next to the deadline for cancellation.
Compare the provider's promise with yours
Availability commitments usually come with exclusions and the provider's own method of measuring downtime, and they should be read together with the service credits and the deadline for claiming them. A credit against next month's bill does not cover the refunds the company has already paid its own customers, so the gap should be checked against your own customer terms.
For support, response time and resolution time are different measures. A provider that promises to respond within an hour still has to fix the problem, unless it also commits to a restoration time, so the company should know the escalation route and the hours during which support is available.
For APIs, the company should check how much notice it will receive before changes are made and before an old version is switched off, and allow its engineers enough time to test the replacement. Where the provider can withdraw a feature at any time, the business question is whether the company could continue without that feature or move to an alternative in time.
Data and security responsibilities
The data processing agreement should be read against where data is stored and which subcontractors receive it, as well as how the company will be told about changes. Under the Nigerian data protection framework, the company remains responsible for the purposes it decides, and transfers of personal data outside Nigeria need a lawful basis, so the provider's agreement should cover its own work and safeguards.
Some providers take a licence to use content uploaded by their customers, and some AI services use that content to train their models. The purpose and duration of that right should be checked, and if the company's own customer contracts prohibit the access the provider's default settings allow, the settings and terms should be changed before any customer material is uploaded.
Security responsibilities are shared between the provider and the company. The provider runs the infrastructure, but account permissions and recovery settings are usually the company's responsibility, and the company should agree an incident contact and the information the provider will supply, so that it has time to decide whether it must notify anyone. I cover the wider obligations in handling personal data from the first product.
Prepare for suspension and for leaving
Suspension clauses list the grounds on which the provider can cut off access and whether the company will have a chance to fix a problem or ask for a review. Evidence of compliance should be kept outside the account, and the recovery contact should be someone who still works at the company.
The company should test an export of its data while the account is active, checking whether attachments and history are included and how long extraction and import would take. Independent backups should also be kept, because the company may need to restore its service while the original account is suspended.
Finally, the provider's liability cap and exclusions should be compared with the loss the company would suffer if the service stopped. That comparison shows which risks the company can accept and where a backup or a second provider would be justified, and it should be revisited as the company's commitments to its own customers grow.
This article is general information and not legal advice. For guidance on your specific circumstances, speak with us directly.