Prorating types and charge cycles affect a customer's bill. Each product is assigned a prorating type and a charge cycle. The amount a customer is charged on each bill depends on the prorating type, the product charge cycle, and the customer's bill cycle. The many possible combinations of these three components can be confusing. The following information helps you know when and how much a customer will be charged for their product.
Prorating Types
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.
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 02/23/2025.
Monthly charge is $12.12.
Bill period start date is 03/1/2025.
Bill period end date is 04/1/2025 (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 02/23/2025 up to, but not including, 04/1/2025. 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 03/1/2025 up to, but not including, 04/1/2025. 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 %.
Charge Cycles
You can choose one of the following Charge Cycles for each product. The default is Monthly.
Weekly - charged on a weekly basis
Bi-weekly - charged every two weeks
Monthly - charged every month
Bi-monthly - charged every two months
Quarterly - charged four times each year
Semi-Annual - charged twice each year
Annual - charged once each year
Once - charged only one time
None - no products ever charged
If the customer's bill cycle and charge cycle do not agree, it can be more difficult to see how much a customer will be charged on the first and last invoices for that service when a prorating type is assigned to that product.
Number of Cycles in Advance
If the product Prorating Type is In Advance, In Advance - No Refund or In Advance - No Prorate, you can designate the number of charge cycles (from 1 to 12 cycles) to bill in advance.
Example
Your company charges for Voice Mail two months in advance. You set up Voice Mail with a charge of $5.00 on a monthly basis and your customers are billed on a monthly bill cycle.
A customer is in the bill cycle that bills on the first of each month. This customer adds Voice Mail on July 5th. The August 1st invoice includes:
$4.35 for the days in July that Voice Mail was in service
$5.00 for the month of August (1st month In-Advance)
$5.00 for the month of September (2nd month In-Advance)
The September 1st invoice includes:
$5.00 for the month of October (2nd month In-Advance)