Billing in Arrears - Prorate

Billing in Arrears - Prorate

This article will break down the behaviour for arrears prorate billing in your PSA.

This will include what happens when a license quantity is increased, and when a license quantity is decreased in a given month.

Scenarios:

License Quantity Increase:

Main quantity is updated at the end of the month to the current license count.

Temporary Prorate line item is added immediately.

Example:

Main quantity stays at 12 and is updated at the end of the month to 13. Temporary prorate item of 1 is added immediately.

At the end of the month, the customer is billed for their actual usage of the month that’s been (billing in arrears).

On the 10th May, licenses are increased from 12 to 13 licenses.

The total number of licenses stays at 12, and at the end of the month, it is updated to 13 licenses.

And a temporary prorate addition of 1 is added to the agreement immediately, with an effective date of 10th May, and a cancelled date of the end of the month (31st May).

At the end of May, we bill them for the 12 licenses they consumed for May, plus the partial 1 license they consumed for the 10th May to the 31st May.

License Quantity Decrease:

Main quantity is updated end of month to the current license count.

Temporary line item is added with negative value immediately.

Example:

Main quantity stays at 12, then it is updated at the end of the month to 11. Temporary prorate item of -1 is added immediately.

At the end of the month, the customer is billed for their actual usage of the month that’s been (billing in arrears).

On the 20th May, licenses are decreased from 12 to 11 licenses.

The total number of licenses stays at 12, then at the end of the month, it is updated to 11 licenses.

And a temporary prorate reduction of -1 is added to the agreement immediately, with an effective date of 20th May, and a cancelled date of the end of the month (31st May).

At the end of the month, we bill them for the 12 licenses they consumed for May, and credit for the 1 license they partially used.