Contract modifications occur when there are changes to performance obligations (POBs) after the creation of a contract. Either price changes or scope changes to performance obligations can result in contract modifications. Contract modifications can also be the addition of new POBs to a contract or subtraction of existing POBs within a contract.
There is no limitation for the number of times that a contract gets amended. The amendment in the contract also impacts revenue recognition based on the type of changes. The following examples list some contract changes that result in contract modifications. All these changes occur after the initial contract timeline and during the contract revision timeline.
- Contract additions
- Contract cancelation
- Contract change (upsell/downsell)
- Merging contracts
- Price adjustments
- Price concessions
- Price modifications
To understand the concepts and logic of contract modification in Zuora Revenue, go through the following topics:
- Accounting treatments
- Timeline for contract modification
- Revenue contract versions
- Predefined contract modification rules
- Adjustment revenue release
For information about how to configure contract modification rules, see Configure contract modification rules.
For information about reviewing contract modification information and related allocation operations, see Contract modifications in Workbench.
For information about the contract modification report, see Contract modification report.
Especially, when the line cancelation triggers prospective allocation based on the contract modification rules, the revenue contract goes into the Contract Impairment state. For information about the contract impairment impacts on accounting entries and how Zuora Revenue handles the impairment amount, see Contract impairment.