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Cancellation Fee for early termination fee

Hi 

 

Did anyone had the same use case as this? how did you overcome it.

 

Problem Statement: 

 

A customer signed up for a 12 months subscription with an initial 6 months commitment period for $100 per month.

he cancelled the subscription after 2 months ($200), and as cancellation fee i need to charge him the remainder of his 6 months ($400) commitment period

 

Considerations:

  • The customer could have a different Billing Cycle Day than the subscription Activation Date, Causing Pro-Ration
  • The Cancellation fee needs to be a Once-off charge
  • The Customer can cancel any day of the month.
  • The Customer could have other active subscription.

 

What i tried so far :

  • Added a semi-annual charge worth $600 with Period Allignment is set to the subscription start date and the activation is the same date i remove the monthly charge, i was hoping that Zuora would do the computation for the remaining charges for me, but had an issue with pro-ration since semi-annual does it by the number of days not months, so the charges if off by $0.4 which is not bad, but complaince won't accept it.
  • Tried to code something to compute for it, off by some points as well although, still working on this.
  • Doing future dated bill-run won't work as well, since there are other active subscription attached to the customer
  • Removed all the charge then add a whole $600 cancellation fee, pretty much solve all issue but the invoice looks messy.

 

so if you have any suggestion please share it. Thanks!!!

Tags (3)
1 REPLY 1
Zuora Staff

Re: Cancellation Fee for early termination fee

I'd recommend the following steps:

  1. Add a one time charge to the subscription for the cancellation fee, $400 in this case. The effective date of the add product amendment should be 'today'.
  2. Cancel the subscription using a cancellation date of the next billing day, this avoids any proration refund on the next step.
  3. Finally do a bill run with a target date of today, you should get an invoice with just the one time charge, make the invoice date 'today'. Since the subscription is now cancelled there will be no more invoice items for that subscription. If you don't want a separate invoice for just the cancellation charge then just wait until the 1st, that invoice will include the cancellation charge along with whatever other subscription charges still remain uncancelled.

So the billing account's bcd is the 1st and they tell me on the 15th they want to cancel, the add product for the cancellation fee will be today, the 15th, but the cancellation will be set for the 1st, and the bill run will have a target date of the 1st but an invoice date of today, the 15th. 

 

Let me know if you have any questions.