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Contracts

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Overview

A contract is an optional overlay on a plan assignment. It can be applied to a master or supplemental plan. By default, plans are assigned to an account in perpetuity unless a change in account status or plan assignment causes the plan to be removed from the account.

By creating a contract, you can specify a duration for which a plan should be assigned to an account and what action should be taken after the contract has expired. You can offer your customers a plan at a special discounted rate for one year. To do so, you can create a plan with a discounted alternate rate schedule, assign a 1-year contract to the plan, and select the option to continue service without contract with standard rates after the contract expires.

Contracts settings determine how proration end dates, invoices for unbilled usage, and contract expiration notices are managed in your Aria system. Contract end actions can suspend the service and billing and generate a pro-rated invoice on the last billing date before the contract expiry date.

When an account's contract expires after the last billing date, account holders can still incur usage based charges before the contract ends. To ensure that these charges are properly billed, select the Generate invoice for unbilled usages on contract end date option.

An account holder can also purchase a new plan that has an end date after the current contract expires. To ensure that contract end dates and plan end dates are in conformance, select the Align proration end date with contract end date option.

The following examples illustrate how these settings can affect billing, proration, invoice generation.

Example 1
  1. Generate invoice for unbilled charges on contract end date is set to True.
  2. Account A has a billing date of the 1st of the month and the current contract ends on Jan. 10.
  3. On Jan. 1, the billing runs. January charges are prorated until Jan. 10, and an invoice is created.
  4. Account A continues to incur usage charges from Jan. 1 to Jan. 9.
  5. On Jan. 10, an invoice is created for the usage charges accrued between Jan. 1 and Jan. 10.
  6. The account status is changed to Contract Expired.
 
Example 2
  1. Align proration end date with contract end date is set to True.
  2. Account A has a billing date of the 1st of the month and the current contract ends on Jan. 10, 2015.
  3. On Jan. 1, the billing runs. January charges are prorated until Jan. 10, and an invoice is created.
  4. On Jan. 10, Account A purchases Plan B with monthly fees of $30 and immediate invoicing.
  5. The invoice contains the monthly charges prorated from Jan. 1 to Jan. 10 ($10).
 
Example 3
  1. The parameters Align proration end date with contract end date and Generate invoice for unbilled charges on contract end date are set to True.
  2. Account A has a billing date of the 1st of the month.
  3. Account A’s current contract for Plan A ($360/yr) ends on Jan 10, 2016.
  4. On Jan. 1, the billing runs. January charges are prorated until Jan. 10, and an invoice is created.
  5. On Jan. 10, Account A purchases Plan B, under the same contract, with monthly fees of $30 and immediate invoicing.
  6. The invoice contains the monthly charges prorated from Jan. 1 to Jan. 10 ($10).
  7. On Jan. 19, the contract is manually renewed and the new contract end date is set to Jan. 10, 2017.
  8. A new invoice is generated with prorated charges for Plan A and Plan B for Jan. 10 to Jan. 31:
  • Plan A charges – prorated for Jan. 10 – Jan. 31 = $10
  • Plan B charges – prorated for Jan. 10 – Jan. 31  = $10
  • TOTAL = $20
  1. The unbilled usage is included in the regular billing on Feb. 1.
 
Example 4
  1. Generate invoice for unbilled charges on contract end date is set to True.
  2. Account A has a billing date of the 1st of the month and its current contract ends on Jan. 10.
  3. The Billing lag days setting is +15, so that 15 days elapse before an invoice is sent for the most current charges.
  4. On Dec. 15, the billing runs and creates an invoice for December charges.
  5. Account A continues to incur usage charges from Dec. 15 to Jan. 10.
  6. On Jan. 10, the system checks the contract end date, ignores the bill lag days, and creates the final invoice containing the prorated recurring and usage charges.
  7. The account status is set to Contract Expired.

 


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Last modified
15:12, 7 Sep 2016

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