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Cancel regular charges and percentage discounts in billed periods

Zuora

Cancel regular charges and percentage discounts in billed periods

Scenario

If you cancel a regular charge in a period that has already been billed, you might encounter a 0.01 rounding difference between CCV and the total invoiced amount. It is because the CCV calculation is based on the charge effective start date and end date, whereas the invoice amount calculation has a dependency on the actual billing timing.   

Example

Suppose your customer creates a subscription to your storage service with a charge of $24.99 per month from Feb 11, 2020 to Mar 10, 2020. You offer a 20% discount charge for the whole period. The bill cycle day is the 11th day of the month.

Action Charge type CCV Invoiced amount Term start date Term end date Bill run target date
Create Subscription
 
Regular recurring charge $24.99 $24.99 2/11/2020
 
3/10/2020 2/11/2020
Add a 20% discount charge Discount charge (20%) 
 
($5)
 
($5) 2/11/2020 3/10/2020 2/11/2020

On Mar 1st, 2020, your customer cancels this subscription. The CCV data is then updated to:

  • For the regular charge: $24.99 * 19 (actual day in this service period) / 29 (days in this billing period) = ($16.3727586207) ≈ ($16.37)
  • For the discount charge: ($5) * 19 / 29 = ($3.2745517241) ≈ ($3.27)

Since you have already billed the invoice, you have to credit back the following invoice amount:

  • For the regular charge: $24.99 * 10/ 29 = $8.6172413793 ≈ $8.62
  • For the discount charge: $5 * 10 / 29 = $1.7234482759 ≈ $1.72

The following table describes the updated CCV and invoice data:

 Action Charge type CCV Invoiced amount Term start date Term end date Bill run target date
Remove product Regular recurring charge $16.37 $24.99 - $8.62 = $16.37 2/11/2020 2/29/2020 3/1/2020
Remove discount charge Discount charge (20%)  ($3.27)  ($5) + $1.72 =  ($3.28) 3/1/2020 3/10/2020 3/1/2020

For the discount charge line, the CCV is ($3.27) while the invoiced amount is ($3.28), which introduces a $0.01 difference between the booking and billing amount. 

Impact

This scenario is a rare case, and the occurrence possibility of this scenario is lower than 0.05%. In addition, the variance for reconciliation between booking and billing of any applicable transaction is always 0.01. Therefore, the impact of this rounding issue to your monthly revenue is relatively low.

Solution

You can create manual journal entries (MJE) in Zuora Revenue to write off the differences in bulk. See Manual journal entries for more information.