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Early Cancellation Fees

We currently have 12-month term contracts with our customers but do allow them to cancel the contract prior to the end of the term.  We'd like to charge customers a sort of "cancellation fee".  Ideally, we are thinking we'd like to charge the customer 50% of the outstanding balance.  Is there a way to do this in Zuora?  If not, exactly that, how do people typically handle this situation?

 

Thanks!

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Support SME

Re: Early Cancellation Fees

Hi @lbrown,

 

I'd need to be more familiar with your charge setup in order to provide an accurate response.

 

Could you clarify if your annual product is billed and paid in arrears, or are you billing on the first day of the Service Period and you're looking for refunding a partial period when cancelling before the end of the term?



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Advanced Tutor

Re: Early Cancellation Fees

Generally speaking the customer is expected to pay in arrears on their Bill Cycle Date.  The first payment is expected up front and will be a pro-rated amount of services from the Service Activation Date to the Bill Cycle Date.  Thanks!

Support SME

Re: Early Cancellation Fees

I see, thanks for clarifying.

 

I'll look into this further. As I can see so far, manual calculation will be needed if you only would like to charge a percentage of the actual remaining period after cancellation, but I will get back to you soon.



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Valued Scholar

Re: Early Cancellation Fees

What we've done is remove the existing product (subscription) and add a new product (Early Termination Fee) with a different Accounting Code to track the different types of revenue, One-time vs. Recurring.

 

What this will do, if it's a prepayment, it'll create a credit for the remaining months and charge the early termination fee.  You'll most likely have a credit that you will owe to your customer if they are only liable for 50% of the cost and you've billed them in advance.

 

Hope this helps!

Support SME

Re: Early Cancellation Fees

This is a very good idea @WD-kenlee, thank you! I also think a One-Time charge should be used in these scenarios, however as mentioned before, manual calculation will be needed in each individual case to set the charge's price to 50% of the remaining period.



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