Documentation
Documentation

Defining prorating rules

Prorating means allocating or assigning an amount to an activity or product that is proportional to some base (determined by a formula or procedure). Prorating is only applied to organizations that bill on an annual or fixed-term basis, as opposed to an anniversary or rotating term basis.

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Note

The number of months used by the prorate rule for an individual is Thru Date to Join Date. Prorate only applies if the Join Date is populated before running the billing.

The three options available to define prorating rules include the following:

  • Do Not Prorate – Same dues regardless of when customer joins.
  • Standard Prorating
    – Prorating for the current year (depends on the billing interval). For example, if a customer joins in month 7 and annual dues are $200, the calculated dues would be 6/12 of the total dues, or $100.
  • Special Prorating
    – User-defined prorating rules, depending upon the needs of the organization. If the Special Prorating is enabled, proration rules are created on the Prorating window. Prorating rules can be used for unique situations that require more than simple monthly prorating within the first year, such as:
    • Quarterly or semi-annual prorating
    • Second-year prorating (receive x% off of next year's dues)
    • Advancing the membership term to the end of the next year
    • Multiple prorating rules for your organization.
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Note

When using a prorate rule, don’t forget to select the prorate rule for the product in the Prorate drop-down.

If a former member rejoins your organization (that is, they already have an existing join date in the system that is earlier than the beginning of the current fixed-term) through the online join page, one of two scenarios can occur:

  • If the contact is an active member, the rejoin is processed as a renewal and prorating does not apply. The contact pays the full membership fee for the fixed-term.
  • If the contact is not an active member, the join date resets to the current system date and prorating is applied. If your organization needs to maintain a record of the original join date, you can create a user-defined field where a staff member can enter the date before processing the rejoin.

If you use Start date control (see Configuring billing options) and enable Apply to new members and Advance start month as of, these values affect the month that is used as the first prorate month. For example, if the Advance start month as of field is set to 15, new customers with a Join Date of August 15 will have their billing Begin Date set to September 1.

Working in the Prorating window

In the Advanced Accounting Console, go to Settings > Billing > Billing products. Click Prorate Rules.

Rules

List of defined prorating rules.

Product

This field is automatically populated with PRORATE. You can edit this value.

Type

Indicates the number of months in the billing period. This number must agree with either the Term span in months on the Billing products window (from the Staff site, go to Membership > Billing products) or the Standard billing interval (from the Staff site, go to Settings > Membership > General).

Description

Specifies a detailed description of the prorating rule.

Prorating Table Entries

The entries in the prorating table specify the amount that a customer is charged. For example, if month 1 represents an on time payment, for which a customer is charged a full fee (100%), the Amt/Add'l Unit field will hold a "1". There must be one table entry for each month in the renewal cycle as defined in the Type field.

Base Amount

Specifies refinements (if any) to the prorating rule. The following codes can be entered in this field:

  • F (Future Credit) - Postpones the prorating discount to the second billing year.
  • B (Bump Date) - Advances the end of the billing term to the end of the next term. The amount charged depends on the multiplier entered in the Amt/Add'll Unit field.
Amt/Add'l Unit

Indicates the percentage of the full price to charge customers.

Using future credit and bump date prorating

In addition to changing the price a customer is charged in monthly increments, special prorating rules also offer Future Credit and Bump Date prorating.

  • Future credit: Future credit prorating applies any time-based discounts to next year's dues and charges full credit for this year's dues. For example, an organization may charge full annual dues no matter when in the year a customer joins, but give a time-based discount for new members joining after the sixth membership month.
  • Bump date: Bump date prorating charges a fee no matter when in the membership year a customer joins, but after a named cutoff point, advances the renewed through date to the end of the next billing term.

    • 📘 Note

    A full annual fee is not charged based upon bump date. The fee is based upon the join date (Member since date on the member's account page), and the Amt/Add'l Unit value set on the prorate rule for the join-date month.

  • Future credit and bump date examples:
    • Click to view table
    Base Amt/Add'l Unit Effect

     

    1.0

    The customer is charged the full annual rate.

     

    0.5

    The customer is charged 50% of the annual rate.

    F

    0.5

    The customer is charged the full annual rate but will receive a 50% discount on next year's rate.

    B

    1

    The customer is charged the full annual rate, but the renewed through date will be set to the end of next year's term, not this year's term.

    B

    1.5

    The customer is charged 1.5 times the annual rate and the renewed through date will be set to the end of next year's term, not this year's term.

📘 Note

If you bill once per year, but want to decrease the amount charged a new customer on a quarterly basis, define a 12-month prorating rule and then use identical line entries for each month in a quarter. For example, the line entries for months 1, 2, and 3 would be identical.

Defining special prorating
  1. From the Staff site, go to Settings > Membership > Billing.
  2. Under Billing, select Annual.
  3. Under Prorating, select Special prorating.
  4. Click Save.
  5. In the Advanced Accounting Console, go to Settings > Billing > Billing products.
  6. Click Prorate Rules to open the Prorating window.
  7. Click New.
  8. (optional) In the Product field, rename the rule.
  9. In the Type field, enter the number of months in the billing period.
  10. In the Description field, enter a description of the prorating rule.
  11. (optional) Enter the Base Amount to reflect second-year prorating or an extension of the term to the next year or fixed term.
  12. Enter a multiplier in the Amt/Add'l Unit field. For example, 50 percent should be entered as .50.

    13. 📘 Note

    The number of lines in the table must equal the number of months specified by the rule type.

  13. Click Save.

    14. 📘 Note

    When using a prorate rule, don’t forget to select the prorate rule for the product in the Prorate drop-down.

Defining future credit prorate pricing

The following example shows a normal prorating setup in which the reduction in the rate is postponed until the second term. If a customer joins during months 4-6, the customer will be billed the full amount the first year and 75% the second year.

  1. In the Advanced Accounting Console, from Settings, select Billing > Billing products to open the Billing products window.
  2. Click Prorate Rules to open the Prorating window.
  3. Click New.
  4. In the Type field, enter 12 as the number of months in the billing period.
  5. In the Description field, enter New Customers as the description.
  6. Enter a multiplier of 1.0 for months 1-3 in the Amt/Add'l Unit field.
  7. Enter F in the Base Amount field and a multiplier of .75 for months 4-6 in the Amt/Add'l Unit field.
  8. Enter F in the Base Amount field and a multiplier of .50 for months 7-9 in the Amt/Add'l Unit field.
  9. Enter F in the Base Amount field and a multiplier of .25 in the Amt/Add'l Unit field for months 10-12.
  10. Click Save.
Advancing the billing term with Bump Date prorating

In the following example, no prorating occurs until month 7 when a new customer is charged half of the rate. Customers joining in months 11 or 12 pay the full amount and will receive services for a longer term (13 and 14 months respectively). The subscription item detail will show the Period date as month 11 or 12, and the Thru date is the end of next year's term.

  1. In the Advanced Accounting Console, from Settings, select Billing > Billing products to open the Billing products window.
  2. Click Prorate Rules to open the Prorating window.
  3. Click New.
  4. In the Type field, enter 12 as the number of months in the billing period.
  5. In the Description field, enter New Customers after June 30th as the description.
  6. Enter a multiplier of 1.0 for months 1-6 in the Amt/Add'l Unit field.
  7. Enter a multiplier of 0.5 for months 7-10 in the Amt/Add'l Unit field.
  8. Enter B in the Base Amount field and a multiplier of 1.0 in the Amt/Add'l Unit field for months 11-12.
  9. Click Save.