Contract modifications for charge segment amendments

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Contract modifications for charge segment amendments

Zuora Billing - RevPro Integration is in Limited Availability

When RevPro is integrated with Zuora Billing by enabling the Zuora Billing - RevPro Integration feature, every charge segment in Zuora Billing is treated as a new SO line in RevPro. However, not every new SO line is treated as a new POB in RevPro. After a new SO line is created for a new subscription, different actions are taken by RevPro based on the nature of the amendments that occur to the existing charge segment. In some cases, the existing SO line is updated with another SO line being created. This new SO line might be or might not be treated as a new POB depending on the type of amendments. In other cases, the existing SO line is updated without creating another SO line.

The following sections explain how different types of amendments are processed in RevPro and how contractual prospective allocation is triggered for the existing SO line.

Charge segment amendment processing

When a subscription is created, a new SO line is created in RevPro for the associated charge segment. After that, when charge segment amendments occur, RevPro will take appropriate actions based on the nature of amendments:

  • If the amendment is to add a product or renew the subscription, a new SO line is created in RevPro. The Skip CT Mod flag of this new SO line is set to No. The New POB contract modification rule is triggered. 

  • If the amendment is to update the product for a price change or quantity change, 

    1. RevPro updates the existing SO line.

    2. If the amendment effective date is the same as the charge segment start date, the Skip CT Mod flag is set to No. Otherwise, the Skip CT Mod flag is set to Yes.

    3. A new SO line is also created in RevPro. The Skip CT Mod flag of this new line is set to No.

  • If the amendment belongs to one of the following types, RevPro will only update the existing SO line without creating a new SO line. The Skip CT Mod flag is set to No.

    • Term & Conditions (term modification)

    • Remove product

    • Cancel subscription

    • Suspend & Resume (contraction)

  • If the amendment belongs to Suspend & Resume (extension), RevPro will create a new SO line. The Skip CT Mod flag of this new line is set to No.

The above processing logic is also illustrated in the following table:

Amendment type Contract modification category Create new charge segment RevPro action Skip CT Mod flag
Create subscription New POB Yes Create new SO line No
Add product New POB Yes Create new SO line No
Renew subscription New POB Yes Create new SO line No
Update product Price modification Yes Update existing SO line Yes*
Create new SO line No
Update product Quantity modification Yes Update existing SO line Yes*
Create new SO line No
Terms & Conditions Term modification No Update existing SO line No
Remove product Contraction No Update existing SO line No
Cancel subscription Contraction No Update existing SO line No
Suspend & Resume Contraction No Update existing SO line No
Extension Yes Create new SO line No

Note:

  • * The Skip CT Mod flag is set to Yes only when the amendment is not to cancel the SO line.

Charge segment amendment example

For example, a subscription is created for 12 months in Zuora Billing. RevPro will create a new SO line with the following details:

Order Action Type Transaction Type Rate Plan Charge # Rate Plan Charge Segment SO Line Identifier Start Date End Date Generated Reason Code Qty Total Contracted Billing
Create subscription SO C-01201108 1 O-0001.1 1/1/2019 12/31/2019 Extension 10 12000

The current open period is March 2019 and an amendment occurs to this subscription to decrease the quantity to 6 for the remaining periods. For this type of amendment, RevPro will first update the existing SO line for the existing charge segment #1 and then create a new SO line for charge segment #2. 

The Skip CT Mod flag of the new SO line is set to No. The amendment effective date (April 1, 2019) is different from the charge segment start date (January 1, 2019), so the Skip CT Mod flag of the updated SO line is set to Yes.

Order Action Type Transaction Type Rate Plan Charge # Rate Plan Charge Segment SO Line Identifier Start Date End Date Generated Reason Code Qty TCB
Update product SO C-01201108 1 O-0001.1 1/1/2019 12/31/2019 Decrease Quantity 10 3000
Update product SO C-01201108 2 O-0001.2 4/1/2019 12/31/2019 Decrease Quantity 6 5400

Allocation treatment

Previously in RevPro, when the Skip CT Mod flag of the SO line is Yes, contract modification will not be triggered for the line. In the above example, the updated SO line (O-0001.1) might not be completely accounted and posted when it ends on March 31, 2019. The leftover revenue might be scheduled for future periods after the O-0001.1 SO line ends.

To support this scenario, the behavior of RevPro is changed when the Zuora Billing - RevPro Integration feature is enabled. When the Skip CT Mod flag of an updated SO line is set to Yes, the contractual prospective allocation will be triggered. As a result, the remaining revenue of the updated SO line can be deferred and released appropriately.

Meanwhile, the Skip CT Mod flag of the new SO line (O-0001.2) is set to No. The appropriate contract modification rule will be triggered based on the Generated Reason Code value of the SO line, which is Decrease Quantity in the above example.

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