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arrears and in-advance charges on same invoice

Hi Community,

 

I've recently launched a product that has recurring and usage charges on the same rate plan. The usage is billed in arears and the recurring charge is billed in advance. The recurring charge is a service fee that entitles the customer to use the product for a period of time (month), then the usage charges are overages from the previous period. Example:

 

Customer purchases Product A on 06/15/18 at a price of $500 per month. They are charged a prorated fee of $250 and are provisioned until 07/01. On 07/01, usage is uploaded to Zuora for the period of 06/15 - 06/30, and a bill run is executed against the account. The customer is charged $500 for the period of 07/01 - 07/31 and $100 for usage in June. 

 

The invoice document date is 07/31 and the target date 08/01.

 

The resulting journal entry will account for the $500 (august) recurrng fee in July as that's the document date on the invoice. This is innacurate as the service is delivered for the period of July. Here's a cropped version of a sample invoice.

 

invoice.PNG

 

We could split up the bill runs into two, one for recurring and one for usage, but then the customer will receive two invoices for the same product, which is awful. 

 

Does anyone have a recomendation on how to keep the customer experience positive (one invoice) and create accurate journal entries in two periods?

 

Thanks!

- Jeff
4 REPLIES 4
Highlighted
Guru

Re: arrears and in-advance charges on same invoice

Hi @jhileman, as a consumer I would be more apt to have less questions on this if it was broken into two sections.  Current Bill and Usage/Overage for Period xyz.  The Service Period is clearly defined on your mock up but sometimes it is easier for customers when you break it up...just a though...great work though!!!


Randi

Master

Re: arrears and in-advance charges on same invoice

Hi @rjohnson,

 

I sincerely appreciate your feedback. You're saying that, as a consumer, having the two charge types broken into two invoices would be easier for customers? Just want to make sure I have this right.

 

This is certainly an option and would solve for the use case.

- Jeff
Guru

Re: arrears and in-advance charges on same invoice

Hello @jhileman, Two sections on one invoice....something like current charges and last months overage charges..two invoices would confuse people I think.

Master

Re: arrears and in-advance charges on same invoice

Hi @rjohnson,

 

I completely agree, but this is where the problem is. There is one "document date" on the invoice which drives the accounting period for which the invoice is booked into. Section A on the invoice may have current charges and section B may have last months overages. One of these sections will be booked in the incorrect period. What do you think?

- Jeff