Group and bill charges with staggered start dates

Context

In this use case, your customer inks a two-year agreement covering six subscriptions to different product rate plan charges with staggered start dates, and expects three invoices to be generated for the subscriptions in different years through the processing of an invoice schedule. 

As shown in the following table, six subscriptions are created by creating an order, with the total amount of $67,000.00 and the billing period being Annual. The term of five subscriptions is 12 months in different years while the term of one subscription is seven months with a later start date. You expect to create a custom invoice schedule to generate three invoices for the six subscriptions with the Annual billing period. Two invoices are expected to be generated in 2023, and another one in 2024. 

Subscription number	Charge start date	Total length (Months)	Charge number	Charge end date	List price	List price base	Billing period
S1	01/01/2023	12	C1	12/31/2023	$12,000.00	Per Year	Annual
S2	01/01/2023	12	C2	12/31/2023	$12,000.00	Per Year	Annual
S3	06/01/2023	7	C3	12/31/2023	$12,000.00	Per Year	Annual
S4	01/01/2024	12	C4	12/31/2024	$12,000.00	Per Year	Annual
S5	01/01/2024	12	C5	12/31/2024	$12,000.00	Per Year	Annual
S6	01/01/2024	12	C6	12/31/2024	$12,000.00	Per Year	Annual

Group and bill charges with staggered start dates 

To create such a custom invoice schedule and generate invoices as expected for the charges with staggered start dates, perform the following steps:

1. Activate the Annual List Price settings.
2. Create six recurring product rate plan charges with the Flat Fee Pricing charge model.
3. Create and activate an order with six subscriptions to the six product rate plan charges, with the total amount of $67,000.00.
   Order O-001 is created with six subscriptions.

   Subscription	Charge	Amount	List price base	Billing period
   S1	C1	$12,000.00	Per Year	Annual
   S2	C2	$12,000.00	Per Year	Annual
   S3	C3	$12,000.00	Per Year	Annual
   S4	C4	$12,000.00	Per Year	Annual
   S5	C5	$12,000.00	Per Year	Annual
   S6	C6	$12,000.00	Per Year	Annual

4. On the order details page, create an invoice schedule with three invoice schedule items for the six subscriptions.
   1. Invoice schedule item 1: Set the invoice date to 01/01/2023 in the On field and the billing amount to 27000 in the Bill field.
   2. Invoice schedule item 2: Set the invoice date to 05/01/2023 in the On field and the billing amount to 4000 in the Bill field.
   3. Invoice schedule item 3: Set the invoice date to 01/01/2024 in the On field and the billing amount to 36000 in the Bill field.
      Invoice schedule IS-00000001
5. Execute invoice schedule item 1.
   1. On the invoice schedule details page, scroll down to the Schedule Items section. 
   2. In the corresponding row of invoice schedule item 1, click the "Generate" action link in the Billing Document column to manually generate a scheduled invoice by an ad hoc bill run.
      Invoice INV001 is generated with the amount of $27,000.00, and the status of invoice schedule item 1 changes to Processed from Pending.
6. On the invoice details page of invoice INV001, click Post Invoice to post the invoice.
7. Execute invoice schedule item 2.
   1. On the invoice schedule details page, scroll down to the Schedule Items section. 
   2. In the corresponding row of invoice schedule item 2, click the "Generate" action link in the Billing Document column to manually generate a scheduled invoice by an ad hoc bill run.
      Invoice INV002 is generated with the amount of $4,000.00, and the status of invoice schedule item 2 changes to Processed from Pending. 
8. On the invoice details page of invoice INV002, click Post Invoice to post the invoice.

Subsequently on 1 January 2024, the third invoice with invoice number INV003 is generated with the total amount of $36,000.00.

Grouping of charges with staggered start dates

With the Billing Schedule feature, you can bill charges with staggered start dates and end dates according to the following algorithm:

• Charges are grouped per term. The term start date of a group is determined by the minimum value of start dates, and the term end date is determined by the maximum value of end dates within the charges with the term start date. All charges that fall into the term start date and term end date belong to the same group.
• Groups are consumed in sequential order. The next group will not be consumed until all charges in the previous group are fully consumed.
• Charges in the same group are billed proportionally according to the total price of each charge.

Zuora automatically checks the subscription term of each rate plan charge contained in the subscriptions of an order. Once any charges with the same start date or end date are found, a union term is determined, with the minimum value of the start dates of these charges as the start date of the union term, and the maximum value of the end dates of these charges as the end date of the union term. All the charges fall into the period ranging from the start date to the end date of the union term belong to the same group.

In this use case, Zuora groups the subscriptions in the preceding order O-001 as follows:

• Subscriptions S1, S2, and S3 have the same end date, so they are considered as Group 1. The union term of Group 1 ranges from 1 January 2024 to 31 December 2024. 
• Subscriptions S4, S5, and S6 have the same start date and end date, so they are considered as Group 2. The union term of Group 2 ranges from 1 January 2024 to 31 December 2024. 

Therefore, during subscription billing and invoices generation, these two groups are consumed in sequential order, indicating that subscriptions S1, S2, and S3 in Group 1 will be completely consumed before subscriptions S4, S5, and S6 in Group 2 start to be consumed. The charges in each group are billed proportionally according to the charge total price.

The amount of invoice INV001 is $27,000, less than the total amount of subscriptions S1, S2, and S3, so all the billed amount of invoice INV001 comes from subscriptions S1, S2, and S3 in Group 1.

Invoice generation details

After the invoice schedule is created, the first invoice with invoice number INV001 is automatically generated on 1 January 2023 with the total amount of $27,000.00. The amount of invoice INV001 is less than $31,000, the total amount of subscriptions S1, S2, and S3. Therefore, all the billed amount of invoice INV001 comes from subscriptions S1, S2, and S3 in Group 1.

The following table lists the amount that is proportionally distributed to each subscription, and the service period of each invoice item in invoice INV001.

Invoice item	Subscription	Charge	Service start date	Service end date	Amount	Total amount
Invoice item 1	S1	C1	01/01/2023	11/14/2023	$10,451.61	$27,000.00
Invoice item 2	S2	C2	01/01/2023	11/14/2023	$10,451.62
Invoice item 3	S3	C3	06/01/2023	12/03/2023	$6,096.77

The amount displayed in the Amount column for each invoice item is calculated based on the following formula:

(Billed invoice amount ÷ Total invoice amount) × Selling price

For example, the amount calculation is as follows for the first and third charge line items in the first generated invoice:

• The amount for the first charge line item is $10,451.61, which is calculated based on the formula of (27000÷(12000+12000+7000))×12000 and rounded based on the default rounding rule specified for the corresponding account. 
• The amount for the third charge line item is $6,096.77, which is calculated based on the formula of (27000÷(12000+12000+7000))×7000 and rounded based on the default rounding rule specified for the corresponding account.

Meanwhile, the service period of each invoice item is determined by the charge amount that is billed in the invoice, calculated based on the following formula:

(Invoice item amount ÷ Selling price) × Number of months in term

For example, the service period calculation is as follows for the first and third charge line items in the first generated invoice:

• The proportion of months for the first charge line item is calculated based on the formula of (10,451.61÷12000)×12 months. The calculation result is 10.45161 months, indicating 10 months plus 13.54 days. A portion of the day 14 November 2023 is consumed by the first invoice. Therefore, the service end date is 14 November 2023 for the first and second charge line items in the same invoice. 
• The proportion of months for the third charge line item is calculated based on the formula of (6,096.77÷7000)×7 months. The calculation result is 6.09677 months, indicating six months plus 2.99 days. A portion of the day 3 December 2023 is consumed by the first invoice. Therefore, the service end date is 3 December 2023 for the third charge line item.

On 1 May 2023, the second invoice with invoice number INV002 is generated with the total amount of $4,000.00. The amount of invoice INV002 is equal to the remaining unbilled amount of subscriptions S1, S2, and S3. Therefore, all the billed amount of invoice INV002 comes from subscriptions S1, S2, and S3 in Group 1. After invoices INV001 and INV002 are generated, Group 1 is completely billed.

The following table lists the amount that is proportionally distributed to each subscription, and the service period of each invoice item in invoice INV002.

Invoice item	Subscription	Charge	Service start date	Service end date	Amount	Total amount
Invoice item 1	S1	C1	11/14/2023	12/31/2023	$1,548.39	$4,000.00
Invoice item 2	S2	C2	11/14/2023	12/31/2023	$1,548.38
Invoice item 3	S3	C3	12/03/2023	12/31/2023	$903.23

On 1 January 2024, the third invoice with invoice number INV003 is generated with the total amount of $36,000.00. The amount of invoice INV001 is $36,000, equal to the total amount of subscriptions S4, S5, and S6. Therefore, all the billed amount of invoice INV002 comes from subscriptions S4, S5, and S6 in Group 2.

The following table lists the amount that is proportionally distributed to each subscription, and the service period of each invoice item in invoice INV00.

Invoice item	Subscription	Charge	Service start date	Service end date	Amount	Total amount
Invoice item 1	S4	C1	01/01/2024	$12,000.00	$3,258.97	$36,000.00
Invoice item 2	S5	C2	01/01/2024	$12,000.00	$1,898.86
Invoice item 3	S6	C3	01/01/2024	$12,000.00	$971.51