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Some countries require you, the merchant, to provide the customer with advance notice before debiting the customer's account for payment, while other countries may not require it but consider it a best practice. Advance notice is especially important when the recurring fees have changed, for example, the customer purchased an additional product this month.
Advantages of Using Advanced Invoicing to Notify Customers
Using advanced invoicing to notifying your customers provides the following advantages:
- It is easy to configure in Zuora by setting the payment terms to net N days for direct debit customers.
- There is no additional coding or logic required.
- Your billing operations will remain consistent across all of your customers.
Creating Customer Notifications
Typically, an email notification is sent to the customer a specific number of days in advance of when their next recurring payment is due. The such notification includes the amount and number of dates until payment will be debited. In Zuora, this can be handled by generating an invoice for the direct debit customer in advance with a payment due date a specified number of days in the future.
To create a customer notification:
- Assign all direct debit customers to a specific billing batch.
- Set payment terms for direct debit customers to be a specific number of days in advance of the charge.
- For example, payment terms can be Net 10 days. If an invoice was generated on October 1, 2011 and the payment terms are Net 10 Days, payment will be debited from the bank account on October 11, 2011.
- Generate an invoice for the batch of direct debit customers using the following information:
- Invoice Date: Specify today's date.
- Target Date: Set this to a number of days in the future, based on the payment term. For example, for Net 10 Days, set the Target Date to 10 days in the future.
- The payment run will collect payment on the payment due date
Customer Notification Example
MD Enterprises purchases a $10 monthly subscription on November 16, 2011 and today is December 1, 2011. The next payment due for MD Enterprises is December 16, 2011.
The merchant is required to provide 15 days notification to MD Enterprises. An invoice will be generated on December 1, 2011 with an Invoice Date of December 1, 2011 and Invoice Target Date of December 16, 2011.
The payment term for MD Enterprises is Net 15 days. Therefore, the payment due date is December 16, 2011.
MD Enterprises receives their invoice and does not contact the merchant with any concerns and does not want to cancel the subscription (in other words, the customer has not reported any concerns regarding the invoice or payment amount). On December 16, 2011, the merchant will attempt payment (via Zuora) and debit the customer's bank account for $10.