Preventing over-crediting for Delivery Pricing charges use case
You can enable the billing setting Available to credit validation for credit memos to prevent your total credit amount from exceeding the total amount of the whole invoice or the amount of an invoice item. For how to enable relevant billing settings, see Enable preventing over-crediting.
This article includes common examples for the Delivery Pricing charge model, and some examples are related to the Delivery Adjustments feature. To access the model and feature, you must enable them from Zuora self-service interface, see Enable billing features by yourself.
Example invoice and subscriptions
One invoice INV00000001 contains two invoice items 1 and 2. The two invoice items correspond to two delivery pricing charges in different subscriptions. The two subscriptions have the same attributes. The two invoice items also have the same attributes.
The following table lists the invoice items and associated subscription charges.
| Invoice item 1 | Subscription 1 and charge 1 |
|---|---|
|
|
| Invoice item 2 | Subscription 2 and charge 2 |
|---|---|
|
|
Examples: when Header and Item-level is selected
The following examples use the above example invoice and delivery pricing charges to explain how to prevent exceeded credit when the Header and Item-level option is selected.
Example 1A: Create delivery adjustments when ad hoc credit memos exist
The Header and Item-level option is selected. Therefore, Zuora validates and prevents the total credit amount from exceeding the total invoice amount for each invoice item.
Two credit memos exist for the delivery pricing charge 1 and invoice item 1.
The following table lists the change in the Available to credit amount of invoice item 1.
| Credit Memo | Source | Credit memo item | Credit amount | Available to credit amount of invoice item 1 |
|---|---|---|---|---|
| CM 1 | Creating an Ad hoc credit memo | Credit memo item 1 | $40 | $2 = $42 - $40 |
| CM 2 |
Creating a delivery adjustment and specifying the adjustment period as follows:
|
Credit memo item 1 |
$1.75 The delivery adjustment period is one day, and the charge price per day is $1.75. Therefore, $1.75 credit memo is generated. |
$0.25 = $2 - $1.75 |
Because the Header and Item-level option is selected, Zuora uses the item amount $42 of invoice item 1 in the validation.
Suppose you want to create the second delivery adjustment for the delivery pricing charge 1, and the start date and end date of the second delivery adjustment are both 2023-08-08. The third CM3 with a credit amount of $1.75 tends to be generated due to the second delivery adjustment. The total credit memo amount will be CM1 + CM2 + CM3 = 43.5, which exceeds the item amount $42 of invoice item 1. In this case, Zuora will prevent you from creating the second delivery adjustment.
In other words, after CM1 and CM2 are generated, the Available to credit amount is only $0.25. You cannot make CM3 of $1.75 exceeding $0.25.
Example 2A: Create ad hoc credit memos after subscription cancellation
The Header and Item-level option is selected. Therefore, Zuora validates and prevents the total credit amount from exceeding the total invoice amount for each invoice item.
One credit memo exists for the delivery pricing charge 1 and invoice item 1.
The following table lists the change in the Available to credit amount of invoice item 1.
| Credit Memo | Source | Credit memo item | Credit amount | Available to credit amount of invoice item 1 |
|---|---|---|---|---|
| CM 1 |
Cancelling subscription and specifying the cancellation date as follows:
|
Credit memo item 1 |
$21 From the subscription term start date 07/08/2023 to the cancellation effective date 21/08/2023, two weeks passed, and the charge price is $21 = $1.75(unit price)*6(weekdays)*2(week). |
$21 = $42 - $21 |
Because the Header and Item-level option is selected, Zuora uses the item amount $42 of invoice item 1 in the validation.
Zuora's behaviors also depend on the setting of another billing rule Include billing engine credits in total available credit as follows:
- If this billing rule is set to Yes, 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. Suppose you want to create an ad hoc credit memo CM2 with a credit amount of $30. After the subscription cancellation, the Available to Credit amount changes to $21. In this case, Zuora does not allow you to issue the second credit memo CM2 of $30. In other words, you can only issue a credit memo of $21 or less.
- If this billing rule is set to No, Zuora does not take into account the billing engine-generated credit memos in over-crediting validation. Suppose you want to create an ad hoc credit memo CM2 with a credit amount of $30. The Available to Credit amount is still $42. In this case, Zuora allows you to issue the second credit memo CM2 of $30.
Examples: when Header-level only is selected
The following examples use the above example invoice and delivery pricing charges to explain how to prevent exceeded credit when the Header-level only option is selected.
Example 1B: Create delivery adjustments when ad hoc credit memos exist
The Header-level only option is selected. Therefore, Zuora validates and prevents the total credit amount from exceeding the total invoice amount for the whole invoice.
Two credit memos exist for the delivery pricing charge 1 and invoice item 1.
The following table lists the change in the Total available to credit amount of the whole invoice.
| Credit Memo | Source | Credit memo item | Credit amount | Total available to credit amount of whole invoice |
|---|---|---|---|---|
| CM 1 | Creating an Ad hoc credit memo | Credit memo item 1 | $40 | $44 = $84 - $40 |
| CM 2 |
Creating a delivery adjustment and specifying the adjustment period as follows:
|
Credit memo item 1 |
$1.75 The delivery adjustment period is one day and the charge price per day is $1.75, therefore $1.75 credit memo is generated. |
$42.25 = $44 - $1.75 |
Because Header-level only option is selected, Zuora uses the total invoice amount of $84 of the whole invoice in the validation.
Compared with Example 1A, suppose you want to create the second delivery adjustment for the delivery pricing charge 1, and the start date and end date of the second delivery adjustment are both 2023-08-08. The third CM3 with a credit amount of $1.75 tends to be generated due to the second delivery adjustment. The total credit memo amount will be CM1 + CM2 + CM3 = 43.5, which doesn't exceed the total invoice amount of $84 of the whole invoice. In this case, Zuora allows you to create the second delivery adjustment.
In other words, after CM1 and CM2 are generated, the Total available to credit amount of the whole invoice is $42.25. You can make CM3 of $1.75 because it is smaller than $42.25.
Example 2B: Create ad hoc credit memos after subscription cancellation
The Header-level only option is selected. Therefore, Zuora validates and prevents the total credit amount from exceeding the total invoice amount for the whole invoice.
One credit memo exists for the delivery pricing charge 1 and invoice item 1.
The following table lists the change in the Total available to credit amount of the whole invoice.
| Credit Memo | Source | Credit memo item | Credit amount | Total available to credit amount of the whole invoice |
|---|---|---|---|---|
| CM 1 |
Cancelling subscription and specifying the cancellation date as follows:
|
Credit memo item 1 |
$21 From the subscription term start date 07/08/2023 to the cancellation effective date 21/08/2023, two weeks passed, and the charge price is $21 = $1.75(unit price)*6(weekdays)*2(week). |
$63 = $84 - $21 |
Because the Header-level only option is selected, Zuora uses the total invoice amount of $84 of the whole invoice in the validation.
Zuora's behaviors also depend on the setting of another billing rule Include billing engine credits in total available credit as follows:
- If this billing rule is set to Yes, 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. Compared with Example 2A, suppose you want to create an ad hoc credit memo CM2 with a credit amount of $30. After the subscription cancellation, the Total available to credit amount changes to $63. In this case, Zuora allows you to issue the second credit memo CM2 of $30. In other words, you can issue a credit memo of $63 or less.
- If this billing rule is set to No, Zuora does not take into account the billing engine-generated credit memos in over-crediting validation. The Total available to credit amount is still $84. In this case, Zuora allows you to issue the second credit memo CM2 of $30.
Example: billing engine generates credit memos when 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.
The following example uses the above example invoice and delivery pricing charges to explain the behavior of the billing engine-generated credit memos.
The Header and Item-level option is selected. Two credit memos exist for the delivery pricing charge 1 and invoice item 1.
The following table lists the change in the Available to credit amount of invoice item 1.
| Credit Memo | Source | Credit memo item | Credit amount | Available to credit amount of invoice item 1 |
|---|---|---|---|---|
| CM 1 | Creating an Ad hoc credit memo | Credit memo item 1 | $40 | $2 = $42 - $40 |
| CM 2 |
Creating a delivery adjustment and specifying the adjustment period as follows:
|
Credit memo item 1 |
$1.75 The delivery adjustment period is one day, and the charge price per day is $1.75. Therefore, a $1.75 credit memo is generated. |
$0.25 = $2 - $1.75 |
Suppose you want to cancel the subscription 1 in the middle of the subscription term with a cancellation effective date of 21/08/2023. A new credit memo of $21.00 is generated for the delivery pricing charge 1 through the bill run.
Even the Available to credit amount of the invoice item 1 is only $0.25. The bill run still generates credit memos based on the cancellation effective date. It doesn’t consider the ad-hoc credit memos from the same invoice. This is to ensure there is no discrepancy between booking and billing.