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Proration Effects with Plan Changes_R31_DEV_9928_Abby

 Removed from R31 then may be added back

Overview

When a customer subscribes to a new plan, cancels a plan, or changes plans in the middle of a billing cycle, you can select one of the following proration assignments:

  • Assign on Anniversary
  • Assign Immediately  
  • Assign in Future 

Note:

  • When choosing Assign Immediately, you can delay the resulting invoice until the next billing date by setting the Proration Invoice Timing field within the plan's Billing & Invoicing tab.
  • When you update a plan's rate schedule by using the update_acct_plan_multi_m or update_acct_plan_m API, this will result in proration or no proration based on the <assignment_directive> that you passed in. This applies to plans with daily, weekly, monthly, or any other billing interval.

When choosing to assign immediately or in the future, different proration occurs, depending on the selected proration option:

  • Client Default 
  • None
  • Full Proration
  • Charge Only Proration
  • Credit Only Proration

Note: The Client Default option defaults to client proration parameter settings.

Examples of Proration Effects with Plan Changes

The tables below provide examples of proration periods and resulting charges or credits. Actual proration periods and resulting charges or credits vary depending on the plan type, billing intervals, and whether you are adding, canceling, or changing plans.

Changing to a More Expensive Plan

This example describes the different proration types and resulting charges or credits that would exist if a customer who is billed on the 15th of every month was switched from monthly Plan A to monthly Plan B on 4/27/15.

  • Plan A's monthly recurring charges are $30.
  • Plan B's monthly recurring charges are $60.
Proration Type Plan A: Credit Amount Unused service:
​4/27 through 5/14		 Plan B: Charge Amount New service:
 4/27 through 5/15		 Prorated Total
As of 4/27		 Charge for Plan B
5/15 Invoice		 Charge for Plan B
on 6/15 Invoice and All Future Invoices for the Subscription

None

None

None

$0 balance

$60

$60

Full proration

$18

($1 daily cost x 18 days of unused service)

$36

($2 daily cost x 18 days of new service)

$18 charge

($36 charge - $18 credit)

$60

$60

Charge only proration

None

$36

($2 daily cost x 18 days of new service)

$36 charge

$60

$60

Credit only proration

$18

($1 daily cost x 18 days of unused service)

None

$18 credit

(Applied to 5/15/15 invoice.)

$42

($60 charge - $18 credit)

$60

 

Changing to a Less Expensive Plan

This example describes the different proration types and resulting charges or credits that would exist if a customer who is billed on the 15th of every month was switched from monthly Plan B to monthly Plan A on 4/27/15.

  • Plan A's monthly recurring charges are $30.
  • Plan B's monthly recurring charges are $60.
Proration Type Plan A:
Credit Amount
Unused service:
​4/27 through 5/14		 Plan B:
Charge Amount
New service:
4/27 through 5/15		 Prorated Total
As of 4/27		 Charge
for Plan A
5/15 Invoice		 Charge
for Plan A
6/15 Invoice		 Charge for Plan A
on 7/15 Invoice and All Future Invoices for the Subscription

None

None

None

$0 balance

$30

$30

$30

Full proration

$36

($2 daily cost x 18 days of unused service)

$18

($1 daily cost x 18 days of new service)

$18 credit

($18 charge - $36 credit applied to 5/15/15 invoice.)

$12

($30 charge - $18 credit)

$30

$30

Charge only proration

None

$18

($1 daily cost x 18 days of new service)

$18 charge

$30

$30

$30

Credit only proration

$36

($2 daily cost x 18 days of unused service)

None

$36 credit (Applied to 5/15/15 invoice.)

$0

($30 charge - $30 credit = $6 credit balance applied to 6/15/15 invoice.)

$24

($30 charge - $6 credit)

$30

 

Credit and Refund Behavior Associated with Proration

In any of the above proration scenarios, the following credit and refund behavior applies:

  • A service credit resulting from proration is assigned to the Master Plan Instance responsible for the proration.
  • A cash credit resulting from proration is assigned to the account.
  • A refund of electronic payment/refund reversal resulting from proration is applied to the method of payment associated to the billing group for the Master Plan Instance if, and only if, the payment associated to the original invoice has been applied to one invoice.

The client parameter Proration on net charges options (under Configuration > Billing > Invoice Settings) allows you to specify which of these amounts to deduct from the charges before a proration credit is calculated:

  1. Charges, Tax, Coupon-based credits, and Discounts (default); or
  2. Charges, Tax, Coupon-based credits, Discounts, and all Service Credits.

Example: A customer signs up for a monthly plan on 1 October 2020 and a service credit is applied to the invoice. Then the customer cancels on 10 October 2020. The prorated refund based on 10 days of the subscription will be calculated based on gross or net charges as described in the sample scenarios below:

Parameter Setting Monthly Charge Service Credit Tax Prorated refund calculated based on:

1. Charges, Tax, Coupon-based credits, and Discounts (default)

$50

$30

$3.50
(7% of the $50 charge)
Gross charges:
$53.50 = ($50) + ($3.50) =
(monthly charge) + (tax)

2. Charges, Tax, Coupon-based credits, Discounts, and all Service Credits

$50

$30

$1.40 = $3.50 - $2.10 = (7% of the $50 charge - 7% of the service credit)
Net charges:
$21.40 = ($50-$30) + ($1.40) =
(monthly charge - service credit) + (tax)
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