Prorated Billing
Prorated billing cycle or Pro Rata billing cycle means the billing cycle generates the invoice on the basis of when the billing cycle was started and it ends on that day when the billing cycle will stop or if the customer can stop or break the prorated billing subscription with his own. It majorly works on a consumption basis and Pro rata is a Latin word that means “In proportion” where anything is shared equally or fairly. The same as Prorated Billing cycle which charges on the basis of consumption means you have to pay as much as you use fairly.
For example: XYZ is Telecommunications industries and one of his customers Mr Bill has opted for the postpaid service of XYZ company sim card where the prorated invoice will be generated. He always makes the payment after using service means on a prorated basis in which the cost will charge on a consumption basis where it will generate prorated invoice in which it contains the Internet Data Charge, SMS, Voice Call Data, and MMS charges.
See the consumptions detail.
1. Internet Data Consumption 50 GB=5$.
2. Voice Call Data 1200 Minute=4$
3. SMS Charges 100=2$
4. MMS Charges 50=9$
Total Amount=20$
It means he has to only pay the amount which he had used 20$ only and prorated invoice generated on each and every month of the billing cycle. This scenario elaborates where Mr. Bill has to pay only the used charges whether it will be Internet data or any type. That basically exaggerated the pro rata or prorated billing cycle charges charged fairly.
This concept of the Pro-rata billing cycle in business can help in different scenarios of the operation like Background Verification vendors, Operations Workflow in business, or resources need in business, and many more activities in different- different industries can use the prorating business subscription to decrease extra complex expenses.
How the Prorated Billing Cycle in Subscription Works:
Let’s Understand more about Prorating Billing cycle and prorated invoicing with different cases and scenarios.
Prorated Subscription Opted By User:
Case 1. Mr X has opted for the prorated billing in subscription and the invoice will generate on the 1st of every month.
Note: If Mr X has ticked the checkbox for prorated billing then it will work according to the smooth functioning of the prorating billing cycle. This means the major part of this case if you want to use the prorating billing cycle service the user or customer must to check the box for prorated service otherwise it will consider a normal billing subscription plan.
Prorating Billing Cycle:
Case 2. Mr. X has opted for the prorated billing subscription service and it will start on the 15th Of July to the 1st Oct.
Note: In this prorating billing cycle the prorated invoice will generate for the month of July will only be for 15 days of consumption from the 15th of July to the 31st of July. In this we can correlate on the basis of consumption basis it was charged and the rest of the days from 1st of July to 15th July was not considered.
Prorated Billing Cycle in Subscription:
Case 3. Mr. Perry purchased a plan from 15th January to 1st May in which he opted for the box for the prorated billing cycle and in between the billing cycle he purchases another service on 15th April and discontinue the older plan which was started on 15th of January.
Note: In this case, Mr. Perry will pay his prorated billing invoice amount every month in a frequent manner but meanwhile he purchased another service on 15th April. In this scenario, the first service will gonna discontinued on 15th April and it will charge only for that particular date but rest 15 days after the 15th of July the amount of 15 days of the plan 1st will be added or refunded or adjusted in the next billing cycle in the next month billing cycle.
Credit Note In Prorating Billing Subscription
Case 4. Mr. Perry has an ongoing prorated billing subscription cycle for 1 year subscription plan and he ended the service with in mid of the year and he didn’t have another plan for any adjustment.
Note: In this case, Mr Perry has canceled his prorated subscription plan within ongoing billing cycle. In this scenario, Mr Perry didn’t have any extra subscription plan that he can adjust the remaining amount. So in this case Mr Perry will get the remaining amount balance through which he maked the payment or in his Bank Account if it was prepaid.If he have opted for the postpaid plan in which the prorated invoice will generate after the compleation of the month so he will only make the payment of remaining days.