Understanding Proration in SubscriptionFlow

Overview

Proration ensures fair and accurate billing when a subscription is changed mid-cycle — such as during an upgrade, downgrade, or adjustment to the billing frequency. Instead of charging or refunding the full subscription amount, SubscriptionFlow calculates the cost difference based on the remaining time in the current billing period or term. This ensures proper revenue recognition and provides a smoother billing experience for customers

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

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

2. Allowed Proration Subscription Types

Use this dropdown to control which subscription types support proration:

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

Choose the option that best matches your billing strategy.

3. Only Allow Proration Through Credit Note

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

• Enabled – A credit note is issued for the unused portion of the original invoice, and the amount is applied to the updated invoice.
• Disabled – No credit note is issued; instead, a negative line item is added directly to the new invoice to reflect the adjustment.

Use this to align proration with your preferred accounting or customer-facing billing style.

4. Prorate New Charges to Next Bill Date

This controls how new charges are applied when subscription changes occur mid-cycle:

• Enabled – Charges apply only for the remainder of the current billing period. 
  Example: If an annual plan starts Jan 1 and is upgraded in June, new charges apply from June to Dec 31.
• Disabled – The billing cycle resets from the date of change. 
  Example: If the upgrade occurs in June, a new full term begins, running from June to the following June.

This lets you decide whether to extend the current term or restart billing upon change.