Proration Policies

Clicking the Proration Policies tab displays the Proration Policies home page where you can view a list of proration policies matching specific criteria, and perform actions such as creating proration policies. .

What is Proration?

The proration feature in Billing Central enables you to automatically charge your customers a proportional amount for partial periods at the start and end of a contract in accordance with the proration policy used by your business. For example, if a customer signs up halfway through the month, the proration policy determines how much they are charged for that initial half month.

You can configure and save a number of proration policies with the calculation method you want to use, such as Use Actual Days in Billing Period or Use Whole Month Threshold. You can also set the most commonly used proration policy as the default.

To assign a proration policy to a contract, select it from the Proration Policy field on the Billing Contract Detail page. When creating a new contract, the default proration policyClosed is assigned unless you select an alternative. The chosen policy controls how proration is calculated for the lines on that contract, ensuring that the customer is billed correctly with any partial periods taken into account. Only contract lines where the billing type is "Recurring Fixed" are prorated. Prorated values are recorded on billing schedules and on billing documents.

Note:

Proration calculations are based on the sales price after discounts and pricing structures have been applied.

You cannot delete proration policies that are assigned to contracts.

For examples of the different calculation methods, see Calculating Actual Day Proration, Calculating Whole Month Threshold Proration, and Calculating 30 Days per Month Proration. The Invoice as Full Billing Periods calculation method equates to no proration because partial periods are billed as full periods.

Note:

When a contract line's charge term and billing term are different, proration is calculated for partial periods using the shorter period. This Help uses charge terms when illustrating proration calculations. For more information about using separate charge terms and billing terms, see Charge and Bill Contracts at Different Intervals.