Enable preventing over-crediting

Enable validating total credit amount of credit memos

You can enable the validation at two different levels:

1. Navigate to Billing Settings > Billing Rules > Billing Document.
2. Click the edit icon  in the row of the billing rule Available to credit validation for credit memos and select one of the following options:
   • Header-level only: If enabled, Zuora validates and prevents the total credit amount from exceeding the total invoice amount for the whole invoice. For more information, see Define billing rules.
   • Header and Item-level: If enabled, Zuora validates and prevents the total credit amount from exceeding the total invoice amount for each invoice item.

Zuora validates and prevents your total credit amount from exceeding the total invoice amount in the following situations:

• Creating delivery adjustments for a specific date when a delivery adjustment already exists on that date. 
• Creating delivery adjustments or ad hoc credit memos when the total credit amount exceeds the total amount of the whole invoice or the amount of an invoice item, depending on the setting of this billing rule.

Enable or disable counting existing billing engine-generated credit memos

You can enable or disable counting existing billing engine-generated credit memos:

1. Navigate to Billing Settings > Billing Rules > Billing Document.
2. Click the edit icon  in the row of the billing rule Include billing engine credits in total available credit and select one of the following options:
   • Yes: If selected, depending on the setting of the billing rule Available to credit validation for credit memos, the Zuora's behaviors are as follows:

     • When Header-level only is selected, Zuora counts both the billing engine-generated credit memos and credit memos generated from other sources in the Total Available To Credit amount of the whole invoice.

     • When Header and Item-level is selected, Zuora counts both the billing engine-generated credit memos and credit memos generated from other sources in the Available to Credit amount of an invoice item. 

   • No: If selected, Zuora does not take into account the billing engine-generated credit memos in over-crediting validation.

Example 1: Create ad hoc credit memos after subscription cancellation

In this example, the billing rule Available to credit validation for credit memos is set to Header-level only. Therefore, Zuora validates and prevents the total credit amount from exceeding the total invoice amount for the whole invoice. 

An annual subscription generates an invoice INV00000001 of $1200, covering the service period from 1/1/2023 to 31/12/2023.

The following table lists the change in the Total Available To Credit amount of the whole invoice.

The subscription is cancelled on 1/7/2023. When the subscription is billed, a credit memo CM1 of $600 is generated for the past six months, covering the service period from 1/1/2023 to 30/6/2023.

Assume that customer care issues a credit memo CM2 from the invoice INV00000001 for $800. Zuora's behaviors are different depending on the setting of the billing rule Include billing engine credits in total available credit, as follows:

• If this billing setting is set to Yes, Zuora counts the credit memos generated due to the subscription cancellation in the Total Available To Credit amount of the whole invoice. After the subscription cancellation, the Total Available To Credit amount changes to $600. In this case, Zuora does not allow customer care to issue the second credit memo CM2 of $800. In other words, customer care can only issue a credit memo of $600 or less.
• If this billing setting is set to No, Zuora does not take into account the credit memos generated due to the subscription cancellation. The Total Available To Credit amount is still $1200. In this case, Zuora allows customer care to issue the second credit memo CM2 of $800.

Example 2: Cancel a subscription when ad hoc credit memos exist

If your billing engine tends to generate credit memos (due to subscription cancellation, product removal, suspension and resumption, and so on) when ad hoc credit memos already exist, the billing engine-generated credit memos are not affected by the settings of the billing rules Available to credit validation for credit memos and Include billing engine credits in total available credit. The billing engine continues to generate credit memos based on the effective date without considering the existing ad hoc credit memos created for the invoice.

Assume that customer care has already issued a credit memo CM1 from Invoice INV00000001 for $800 first in this example. Then, you want to cancel this subscription and set the cancellation effect date to 7/1/2023. The billing engine continues to generate credit memos based on the cancellation effective date without considering the existing ad hoc credit memos.