SECTIONSAligning Billing Dates When Adding Lines to an Active Contract
Sometimes you might need to add lines to an active contract that you have already started billing. This can happen if the customer decides to take add-on products or services after the contract has started. Typically you add lines to an active contract by raising a change request.
If you add a new recurring line to an active contract, you can choose to align it to an existing recurring line. The existing recurring line is known as the controlling line. After the new line's first bill date, its billing periods and billing dates align with the controlling line. This means that add-on lines can more easily be billed at the same frequency and on the same dates as existing lines on the same contract.
If you decide to align a contract line item to a controlling line, be aware that:
- The controlling line must be on the same contract as the new line, and cannot itself be aligned to another line.
- You cannot edit billing information on a controlling line: Billing Term, Billing Type, First Bill Date, Recurring Bill Date, Start Date.
- You cannot delete a controlling line.
For instructions on how to align a contract line item to a controlling line, see How to Align Contract Line Items.
Let's use an example to illustrate how this alignment works. Imagine that a contract has one line which is charged monthly (+1M) but billed quarterly (+3M), and uses an Actual Days proration policy.
|
Line |
Start Date | First Bill Date |
Charge Term |
Billing Term |
Sales Price |
|---|---|---|---|---|---|
| 1 | February 18 2022 | February 18 | +1M | +3M | 400 |
By applying the billing term to the contract line item's start date and first bill date, its billing periods and billing dates are as follows:
|
Billing Periods for Line 1 |
Billing Dates for Line 1 |
Value |
|---|---|---|
| February 18 - May 17 | February 18 | 3 * 400 = 1200 |
| May 18 - August 17 | May 18 | 3 * 400 = 1200 |
| August 18 - November 17 | August 18 | 3 * 400 = 1200 |
| November 18 - February 17 | November 18 | 3 * 400 = 1200 |
On April 5, you add a second line to the contract. This line is also charged monthly (+1M) and billed quarterly (+3M).
|
Line |
Start Date | First Bill Date |
Charge Term |
Billing Term |
Sales Price |
|---|---|---|---|---|---|
| 2 | April 5 2022 | April 5 | +1M | +3M | 150 |
By applying the billing term to this contract line item's start date and first bill date, its billing periods and billing dates are as follows:
|
Billing Periods for Line 2 |
Billing Dates for Line 2 |
Value |
|---|---|---|
| April 5 - July 4 | April 5 | 3 * 150 = 450 |
| July 5 - October 4 | July 5 | 3 * 150 = 450 |
| October 5 - January 4 | October 5 | 3 * 150 = 450 |
| January 5 - April 4 | January 5 | 3 * 150 = 450 |
This means that the two lines will be billed on different dates and for different billing periods. This is inefficient and possibly confusing.
However if you select Line 1 as the controlling line for Line 2, the billing periods and billing dates for Line 2 are as follows:
|
Billing Periods for Line 2 When Aligned to Line 1 |
Billing Dates for Line 2 When Aligned to Line 1 |
Value |
|---|---|---|
| April 5 - May 17 | April 5 | 150 + (150 * 13/31) = 212.90 |
| May 18 - August 17 | May 18 | 3 * 150 = 450 |
| August 18 - November 17 | August 18 | 3 * 150 = 450 |
| November 18 - February 17 | November 18 | 3 * 150 = 450 |
Line 2's first billing date is its chosen date (April 5) but after that its billing dates align with Line 1.
Line 2's first billing period is truncated to align with the end of Line 1's billing period (May 17). This billing period comprises one whole charge period (April 5 - May 4) and a partial charge period (May 5 - May 17). Because the contract is using an Actual Days proration policy, the value of the partial charge period is: 150 * (13/31) = 62.90
The total value for the first billing period is therefore: 150 + 62.90 = 212.90
If a contract does not have a proration policy, partial periods are charged as whole periods.