Understanding Proration in SubscriptionFlow

Overview

Proration ensures fair and accurate billing when a subscription changes mid-cycle—such as an upgrade, downgrade, or modification to billing frequency. Rather than charging or refunding customers the full amount, proration calculates the cost difference based on the time left in the current billing period or subscription term. This helps maintain accurate revenue recognition and customer satisfaction.

How to Access Proration Settings

To configure proration in SubscriptionFlow:

1. Navigate to Admin Settings.
   
   
2. Go to Preferences > Subscriptions.
   
   
3. Scroll to the Proration section.
   
   
4. Use the settings below to tailor how proration works for your business.

1. Enable Proration

Toggle the Enable Proration switch to activate proration features within your account. This must be enabled for any proration behavior to take effect.

2. Allowed Proration Subscription Types

This dropdown lets you specify which subscription types should have proration applied:

• Evergreen – Applies proration only to ongoing, non-termed subscriptions.
  
  
• Termed – Applies proration only to subscriptions with a fixed term.
  
  
• All – Applies proration to both evergreen and termed subscriptions.
  
  

Choose the option that best matches your billing model.

3. Only Allow Proration Through Credit Note

This dropdown controls how proration is applied when a subscription is modified:

• Enable – When a subscription is changed (e.g., upgraded), the system will:
  
  
  • Create a credit note for the unused portion of the original invoice.
    
    
  • Apply the credit to the new updated invoice.
    
    
• Disable – Instead of using a credit note:
  
  
  • A negative line item is added to the updated invoice to adjust the amount directly.
    
    

This setting helps align proration behavior with your accounting or customer communication preferences.

4. Prorate New Charges to Next Bill Date

This dropdown determines how changes made mid-subscription are billed:

• Enable – Changes to the subscription (e.g., plan or quantity) apply only for the remainder of the current billing period.
  Example: An annual subscription starts on Jan 1. A change made in June is applied from June to Dec 31.
  
  
• Disable – Changes take effect for a full new term starting from the change date.
  Example: A change made in June resets the billing cycle, and new charges apply from June to June of the following year.
  
  

This setting helps you control whether changes affect only the current cycle or create a new billing timeline.