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Two questions on handling new customers who fail their initial payment...

Let's say I have a new customer (Mike) who wants to subscribe to my monthly service (MovieClub). He wants service to start in the future, say 6/1/16 and the MRR is $30. The following occurs:

  1. On 6/1/16, the bill is created for $30 but the payment fails (let's say it's a credit card decline).
  2. Because of the payment failure, we do not turn on Mike's MovieClub service.
  3. Five days later on 6/6/16, Mike calls and wants to use a different credit card for payment. 

At this point, I think there are two options from a pure business POV:

  • Option #1 - charge Mike $30 and change his monthly bill date to the 6th of each month
  • Option #2 - keep Mike's monthly bill on the 1st of each month, but pro-rate his first bill and payment to $25 

 

Are both of these options possible through Zuora? If yes, how?

 

I'm new to Zuora, so please use "small words" Smiley Happy. I know there are multiple dates in Zuora (Contract Effective, Activation Date, Target date for Billing and Payment Runs), etc but I'm not sure how they interplay in this scenario.

 

Thanks in advance for any suggestions! 

 

Thanks,
Doug

3 REPLIES 3
Support SME

Re: Two questions on handling new customers who fail their initial payment...

Hi @dmark

 

If you collect the Payment when generating a subscription and the Payment fails during the subscribe process, the whole transaction gets rolled back (the creation of payment, invoice, subscription and account objects all get deleted).

 

However if you create the account and subscription first, and only generate and invoice and attempt to collect a payment in a separate transaction, the payment simply fails, and now you have a customer with an outstanding invoice for the period 6/1/16 - 6/30/16. Please note Zuora does not automatically remove any services in case of a payment failure.

 

You have the following options:

 

A: Retry the payment either by using the same payment method (the card might be out of funds at the first attempt but will have funds at the second) or choosing an alternative one

 

B: If you don't wish to retry the payment and would like to proceed with the options you've described, then:

 

- Cancel the outstanding invoice, and either delete the subscription (and re-create it from the scratch with below details), or amend it by removing the product that was sold, using the effective date 6/1/16 (and re-adding it with below details). From this point, we can look into your options. 

 

Option #1 - charge Mike $30 and change his monthly bill date to the 6th of each month

- Again, you have more than one options, for example you can set the Customer Account's Bill Cycle Day to the 6th of the month, and use the charge configuration with the following settings when re-adding the product (OR re-creating the subscription from the scratch):

bd1.JPG

 

- Alternatively, you can configure your subscription to have it's independent billing day, no need to change the Customer Account's Bill Cycle Day in this scenario:

bd2.JPG

 

For both of these options, you will need your subscription to be effective from 6/6/16, so your service period will be 06/06/2016 - 07/05/2016.

 

Option #2 - keep Mike's monthly bill on the 1st of each month, but pro-rate his first bill and payment to $25:

- In this case you'll simply need to have the following charge configuration (same as the first one shown above), and again, start your subscription (make it effective) from the 6th:

bd1.JPG

 

bd3.JPG

 

The above scenario leaves the Bill Cycle Day of the account at the 1st of the month. The charge's Billing Day is defaulted from the Customer Account, meaning it's still the 1st of the month, but your subscription actually becomes effective on the 6th only, so you'll have a prorated period from 6/6/16-6/30/16, followed by full  monthly periods e.g. 07/01/2016-07/31/2016.

 

-------------------------------------

 

So to summarize, both options are possible, but both involve removing the product and re-adding it with the new details, or deleting the subscription and re-creating it with the new details.

 

Let me know if you have any further questions!



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Advanced Tutor

Re: Two questions on handling new customers who fail their initial payment...

Viktor,

 

This is great information. Thanks. I may have some more questions later, but my initial follow-up questions are:

 

Re: (Option A) Retrying the payment

If I simply retry the payment either using the same or a new payment method and assuming I don't make changes to the invoice, won't I be overcharging the customer? For example, if I had a retry schedule set for "every 5th day" and the retry was successful on the 3rd retry (i.e., 15th day), wouldn't I be collecting $30 (full MRR) even though I'm not activating Mike's service until the payment succeeded on 6/16. Doesn't that mean Mike pays $30 and really only gets to use the MovieClub service from 6/16 through 6/30?

 

Re: (Option B) The two original scenarios and your proposed solutions

Is it safe to say that your proposed solutions can also be systematically implemented if a developer knows how to call the correct APIs in the correct sequence, etc? If I wanted to allow the customer to self-serve to fix their payment issue, are both Option #1 and Option #2 still on the table?

 

Thanks,
Doug

Support SME

Re: Two questions on handling new customers who fail their initial payment...

Glad to be of help, Doug.

 

By the retry schedule, I assume you mean a Payment Run. A payment run only creates payment transactions if ALL the following are true:

 

1., auto-pay is ON for the customer account

2., the account has an invoice with an open balance

3., the target date of the payment run is on or after the invoices' due date.

 

The key point here is, the payment run will only collect the amount that's outstanding on said invoice. And since you have to have the invoice first, depending on your subscription configuration, it's already decided what amount you're going to collect.

 

So the process is:

- you create the customer account

- you create the subscription with the associated products and with the charges configured - this is the point where you decide your bill day, your effective dates etc.

- then you can bill this subscription, generate the invoice as per the above settings

- and finally you're able to process a payment for your outstanding invoice

 

So please note that out of the box, we can't tie the start of the subscription to the first successful payment attempt.

 

This brings us to your next question: yes, these could be systematically implemented by using our APIs. E.g. using a webshop interface, you could present the option to your customer to choose if they want to have a prorated period or a full period starting later on, which can then be translated to API calls, resulting in the desired subscrtiption / charge scenario.



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