You can choose one of the following Prorating Types for each product. The default is None.
None - If a product is not prorated, the customer is charged as if the service had been in effect for the entire bill cycle (i.e., billed the full amount).
In Arrears - If a product is prorated in arrears, the customer is charged the same percentage of the charge as the percentage of time the product is in service.
In Advance - If a product is prorated in advance, it is more complicated. Since you cannot charge for the product before it is even ordered, you need to charge the customer from the time it is in service to the end of the bill cycle AND, in order to be charging in advance, you must also charge the customer for the next bill cycle. In addition, when the product is terminated in the middle of a bill cycle, your customer must receive a credit for the portion of the bill cycle that was already paid for (in advance). The system does this for you automatically.
In Advance - No Refund - Works the same as “In Advance,” EXCEPT when the item is disconnected. In this scenario, there is no refund.
In Advance - No Prorate - If a product has a prorating type of "In Advance - No Prorate," the product is charged at its given rate on the first bill period, but no additional charges are added for the time the product is in service before that bill date. Also, the product is not charged on the bill date after its disconnection (since the customer has already paid for the current bill period). However, no credit or refund is given to the customer for the time the product was NOT in service from the disconnect date to the bill date.
In Advance - Forward Disconnect - Works the same as “In Advance,” EXCEPT when the item has a future disconnect date in the next bill cycle. If this occurs, the product is charged a prorated amount in advance, not the full amount. This amount is the percentage of the charge as calculated from the bill start date of the next bill period to the future disconnect date. This charge is then considered "final billed." Using this in-advance prorating type eliminates the need for a credit on the bill run after the disconnect date of the product.
As an example, the following diagram illustrates how a product is charged for the first and last invoices, if both the product's charge cycle and the customer's bill cycle are Monthly.
Assuming the customer started using the product during a bill cycle and stopped using the product during a different bill cycle, the following charges apply, depending on the prorating type chosen for that product.
None - The customer is charged the full monthly charge for all months' service, even though the customer did not have the product for the full month when he started the service or when he terminated the service.
In Arrears - The customer is charged for the product that was already used at the time of the bill. For a partial month's use, the customer is charged a percentage of the monthly charge that corresponds to the percentage of time the customer was able to use the product. That is, on the first invoice that includes the new product, the customer is only charged for the time the product was available to that customer. Each full month that the customer has the product, the customer is invoiced the full monthly charge. The invoice after the customer terminates the product only includes the percentage that the product was available to that customer.
In Advance - The customer is charged for the next month's use of the product. You cannot charge the customer before the customer has ordered the service. Therefore; on the first invoice after the customer receives the product, you need to charge the customer for both the time the customer has already used the product (a percentage, like In Arrears) and the next month's charge. When the customer discontinues the product, you issue a credit on the last invoice for the portion of the product the customer did not use (again, like In Arrears).
In Advance - No Refund - The customer is charged for the next month's use of the product. Since you cannot charge the customer before the customer has ordered the service, on the first invoice after the customer receives the product, you need to charge the customer for both the time the customer already used the product (a percentage, like In Arrears) and the next month's charge. When the customer discontinues the product, a credit is NOT issued on the last invoice for the portion of the product the customer did not use.
Example
Prorating is based on the percentage of the current bill period that the product has been in service.
Product proration type is In Advance.
Product service start date is 02/23/99.
Monthly charge is $12.12.
Bill period start date is 03/1/99.
Bill period end date is 04/1/99 (this is the start date of the next bill period).
The percentage is calculated using the following numbers:
Duration Used
The duration of the product, in seconds, from the product service start date to the bill period end date.
From 02/23/99 up to, but not including, 04/1/99. The Duration Used = 3,196,800 seconds.
Duration Per Cycle
The duration per cycle is the duration, in seconds, from the bill period start date to the bill period end date.
From 03/1/99 up to, but not including, 04/1/99. The Duration Per Cycle = 2,678,400 seconds.
Percentage
The percentage is the Duration Used divided by the Duration Per Cycle, plus 1 (add 1 to the results of the division, because the product is prorated in-advance).
(3,196,800 seconds ¸ 2,678,400 seconds) + 1 = 2.19 %.
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Proration Logic Enhancement to Evaluate Each Month Individually (version 20.1)
For the proration types listed below, the proration logic evaluates each month individually when calculating a prorated charge. It calculates the length of time (and percentage to charge) for each applicable month based on the number of days in the month, instead of using the number of days in the month being billed against the entire span of days across all applicable months. This results in a more accurate charge. It applies to products with a prorate type of:
In Advance
In Advance - No Refund
In Advance - Forward Disconnect
In Arrears
Example:
An in-advance product is added to an account and charged as follows:
Charge = $100
Charge start: 2/18/2019
Charge end: 4/20/2019
Total days = 62 (11 in February, 31 in March and 20 in April)
Bill Period: 11090401 (03/01/2019-03/31/2019)
Proration is calculated as follows:
For February (based on 28 days) percentage = 11/28 = 39.3% = $39.30
For March (based on 31 days) percentage = 31/31 = 100% = $100.00
For April (based on 30 days) percentage = 20/30 = 66.7% = $66.70
Total = $206.00
Note
Prior to version 20.1, the proration percentage would be calculated as 62/30 days in April = 200.07% = $207.00