Calendar Billing 

Introduction 

Having the flexibility to select a Billing date is just as important as billing itself. With Chargebee's Calendar Billing feature, you can set the billing date for your customers, regardless of the date they sign-up.

If you are in SaaS business, you may want to bill a customer on a specific date, based on a request. Or if you are in eCommerce business, you may want to bill your customer based on when you can ship your product. Regardless of the kind of business you are in, the Calendar Billing feature is designed to accommodate your billing configuration.

Calendar billing can be implemented for subscriptions with weekly, monthly and yearly billing periods. It is also applicable for sign up, renewals, activation post trial, future start, and reactivation.

Billing date is set differently based on the period of subscription. For a weekly subscription, it can be set as any day of the week, from Monday to Sunday.

For monthly subscriptions, billing date can be a particular date, from 1st to 31st of the month. Subscriptions with a term greater than a month (quarterly/annual) will use the monthly billing date.

The different approaches for setting a billing date are:

• Based on the sign-up date of the subscription
• Common billing date for all customers
• Billing date set for a customer (based on demand)
• Billing date aligned with that of first subscription renewal date (when the customer has signed up for multiple subscriptions)

Alignment of Billing Date 

After setting the billing date, you can decide the billing cycle from when the billing date is implemented. There are two options to go with:

1. Immediate Alignment: The subscription billing date will be changed immediately to the new date and charges/credits are raised accordingly.

Example:
A customer has a billing date set as the 15th of every month. They signed up for the plan on February 5.

Here is how the subscription term is aligned to the billing date.

Customer's first billing cycle will fall between February 5 and February 15 and the first renewal date will be February 15.

2. Delayed Alignment: The subscriptions will be aligned to the new billing date on first renewal i.e., the customer's subscription will go through one full billing cycle before it is aligned with the billing date.

Example:
A customer has a billing date set as the 15th of every month. They sign up for the subscription on February 5.

The first billing cycle of the subscription will be 1 month i.e., from February 5 to March 5. The subsequent billing cycle will fall between March 5 and March 15, which will be treated as the first renewal period. From the second renewal on, from March 15, the subscription will continue with the normal billing cycle.

Adjusted Term

Whenever a subscription is aligned to a specific billing date, the subscription period is bound to be adjusted. In most cases, this term/period runs shorter than the actual subscription period.

Example 1:
Say, a customer signs up on February 5, for a subscription that renews on the 15th of every month. The Adjusted term here will be 10 days and will be counted as one billing cycle of the whole subscription.

Example 2:
Consider two quarterly plans, Plan A and Plan B that charges $500/quarter.

A customer, who's billing date is the 15th of every month, subscribes to Plan A on Mar 5 and Plan B on April 1.

Even when the subscriptions have the same billing period and the billing date, since they are not aligned by the month, a separate invoice will be generated for both the subscriptions.

Collecting Charges 

Charging a customer for the adjusted term can be done in two ways:

• Regular: Regular charge model is when the customer will be charged for the regular value of the subscription irrespective of the term. This is usually the case for merchants dealing with physical goods, wherein a delivery/shipment can happen even in the adjusted period.
• Prorated: When a prorated charge model is used, the charge raised for the adjusted term is proportionate to the service period offered. This is generally preferred by merchants dealing with SaaS or other service based offerings

Calendar Billing for e-Commerce 

For e-commerce, customers are expected to pay in advance for the products as the merchant will have to prepare for the delivery. For this reason, the merchant can set up a cut-off date for signing up for the service. Customers who pay on or before the set cut-off date are eligible for the delivery of the product on the current subscription cycle; else the delivery will be shifted by a month/week, depending on the tenure of the subscription.
Alternatively, based on the sign up date of a customer, you could have a specific billing date set for them.

There are three rules to keep in mind when it comes to the first-time delivery of a subscription based e-commerce product:

1. Date Range: You can define a date range within which the customer should sign up for the service.
2. Billing Date: Once the date range is in place, you can define the billing date i.e., whoever signs up for the service within the date range will be billed on the date you define here.
3. Shift a Renewal: If the customer signs up for the service on a date that falls beyond the cut-off date, the charge for the service will be collected upfront. However, the delivery will not happen on the first billing cycle and hence will be shifted by a week/month.

Example:

Say, you set up a date range, that is 1st to 8th of every month, and the billing date is the 9th.
For customers who sign up within the date range, the billing date is the 9th and they receive the product on the 8th of the upcoming month.

If a customer signs up on February 5, they will be billed immediately (and not on February 9) and will receive the shipment on March 8. They will be billed for the subsequent shipment on March 9.

The following are some additional scenarios you are likely to come across:

Calendar Billing for SaaS 

There are two approaches for billing a SaaS customer.

1. Common Billing Date: You can have a common billing date for all your customers and align the renewal of the subscription with the billing date set by you. To know more on billing date alignment read Alignment of Billing date.

2. Customer Specific Billing Dates: You have two options for making the billing date customer specific:

• You can personalize the renewal date for your customers if they demand so.
• It can be the date of activation of their first subscription, i.e., if the customer has signed up for multiple subscriptions, the subsequent ones will align with the renewal date of the first subscription.

When a billing date is not chosen, each subscription will have its own billing date, which is based on the activation date of each corresponding subscription.

Example:

Say, a customer signs up on January 15 for a subscription (Plan A $200) and signs up for another subscription on February 5 (Plan B $100). When there is no billing date defined for the customer, each subscription will renew every month on the sign-up date.

You can choose to have billing dates only for specific customers while allowing the remaining to be billed as the per subscription activation date.

Example:

Say, a customer has a specific billing date as 15th of every month. When they sign up for a subscription on February 5, the initial subscription period is set from February 5 to February 15 and a corresponding prorated charge is raised.

You can choose to have the billing dates as per the first subscription activation for most of your customers while choosing to have a specific billing date for a few.

Example:

Say, a customer signs up on January 15 for a subscription (Plan A $200) and subsequent subscriptions are set to be aligned with the first subscription.
When the customer signs up for another subscription on February 5 (Plan B $100), the initial subscription period is set from February 5 to February 15 and a corresponding prorated charge is raised.

Signing up for a quarterly/annual plan

Example:

Say, a customer has a billing date set as the 15th of every month and they sign up on March 5 for a subscription of a plan which renews every quarter (Plan A $500).

The initial term of the subscription will be set as 3 months less the prorated period not consumed in the month of activation (~20 days). The initial period for the quarterly subscription will be set as March 5 to May 15, for which a corresponding prorated charge is raised.

Delayed Alignment 

Delayed Alignment is useful when you want to let your customer use the subscription service for one full billing cycle before aligning to the billing date. The sign up date and the billing date will be aligned on the first renewal. This will help set the customer's expectation on how much they will be charged for a full subscription right at the beginning of the subscription.

Customer will be charged in full for the first billing cycle of the subscription without any proration. The prorated charge will appear on the first renewal.

This will be particularly useful when customers are signing up for a subscription - they will be able to see the actual subscription value (listed in the plan), instead of a prorated amount. It might be difficult to manage communication if a prorated charge is raised in such cases

Example:

Say, a customer has a specific billing date as 15th of every month. When they sign up for a subscription on February 5, the initial subscription period is set as February 5 to March 5 (without proration) and a regular charge is raised. On March 5, i.e. the first renewal, the subscription aligns with the billing date and the next subscription period is set as March 5th to March 15th

Threshold days & Extended period 

With a change of billing date, you can either charge the customer separately for the adjusted term or combine the adjusted term with the next renewal. When the adjusted period is too short, like a day or two or even less than a week, a customer is less likely to fancy a separate invoice for the adjusted term. So it is best to combine the adjusted period with the upcoming renewal to create a longer-than-usual subscription.

Combining the subscription will consolidate the charges.
To decide, whether or not to combine the adjusted term, you can set Threshold days.

To set up Threshold Days, contact support 

Example:

Say, a customer has a specific billing date as 15th of every month with Threshold Days defined as 5.

When the customer signs up for a subscription on February 12, which is 3 days away from the billing date, the initial subscription period is set as February 12 to March 15 and a prorated charge is raised for the extended period. From March 15 onward, i.e. from the first renewal, regular billing resumes and regular charges are raised on each renewal.

Manage Billing Date 

Merchant Introduces a new Billing Date 

Calendar billing gives you the control to change the billing date for the customer(s) based on your requirement, regardless of the billing date of the current subscription.
This will align the current billing date to the newly set billing date.
If a customer has multiple subscriptions, you can align all the billing dates to one date.

Example:
Say, a customer, who does not have a billing date set, has 2 subscriptions renewing on different dates.

On April 10, a billing date is introduced for the customer - 25th of every month. There will be no immediate effect of this change in billing date.

The existing subscriptions will align to the newly introduced billing date on the next renewal.

Corresponding prorated charges will be raised for each of the subscriptions.

Change in Billing Date 

In this scenario, the customer will continue with the current subscription but the billing date will change. If the customer has more than one subscription, the billing date of all subscriptions will align with the chosen billing date from the upcoming renewal

Example:

A customer has a billing date set for the 15th of every month. On April 10, the billing date is changed to the 25th of every month.

The billing date will not affect the subscription immediately. The existing subscription(s) will align to the newly introduced billing date only on the next renewal.

Subscription Changes and Calendar Billing 

With Calendar Billing enabled, these are the impacts of change in the subscription:

1. Change in Existing Subscription: When a customer opts to change from one plan to another, say Plan A to Plan B, both being subscriptions with the same duration, the billing period and upcoming renewal date will remain the same as before. A prorated credit will be generated for Plan A and a prorated charge will be generated for Plan B for the period that falls between the date of change, until the upcoming billing date.

Example:

Customer has subscribed to Plan A ($100/month) with the billing date falling on the 15th of every month (set for the customer). Customer has decided to upgrade to Plan B ($200/month) from April 5 onward. Since the 15th is the customer set billing date, Plan B will align to 15th and will renew on the 15th of every month.

2. Change in Subscription (with term change): A customer can change a monthly subscription to quarterly or yearly and even vice versa. Since the billing date is the same, a prorated charge will be generated for the rest of the subscription period in the new plan.

Example:

A customer has a billing date of 15th and has a subscription (Plan A) renewing on the 15th of every month. On April 5, the customer shifts to a plan which renews every quarter(Plan B - $500).

Since there is a change in the subscription term, a term realignment takes effect immediately. The initial term of the subscription (with plan B) will be set as 3 months less the prorated period consumed in the month of change (~21 days). The initial period for the quarterly subscription will be set as April 5 to June 15.

Following are the charges/credits raised during the transition:

3. Change in Next Billing Date (of the subscription): Even if there is no change in the existing plan, the customer can still have their billing date changed from the upcoming renewal onward.

There are two contexts to be taken into account:

1. When the Customer does not have a billing date: If the customer does not have a billing date, it can be shifted to any day/date in the upcoming renewal week/month. However, the charge will be prorated based on the Proration Settings.
2. When the Customer has a billing date: When a pre-set billing date is present for a customer, the next billing date of the subscription can be shifted only by a week/month based on the subscription period. Say, you have decided to give a month's subscription for free for an existing customer, the billing date will not change, however, the billing month will shift to next.

Cancellation and Reactivation 

With Calendar Billing enabled, here is how the cancellation and reactivation of a subscription is dealt with.

The billing date of a reactivated service is aligned based on the date of reactivation. The following are the scenarios to consider:

1. In-term Reactivation: This is when the customer reactivates their service before the renewal. In this case, there will not be an interruption in the service and an invoice will be generated as usual. No charge will be raised for the interim. Check out In-term Reactivation's page to know more.

Example:
A customer has a billing date of 15th and has a subscription (Plan A) renewing on the 15th of every month. On March 25, the subscription was cancelled and was later reactivated on Apr 5.

Since the reactivation happens within the subscription period (Mar 15 to Apr 15), there will be no charges raised on reactivation.

2. Out of Term Reactivation: This is when the customer reactivates the subscription after the renewal date, i.e., the customer renewed at a period they have not yet paid for. They will have to pay for the adjusted term that falls between their reactivation date and the upcoming renewal. A prorated invoice will be generated.

Example:

A customer has a billing date of 15th and has a subscription (Plan A) renewing on the 15th of every month. On March 25, the subscription was cancelled and was later reactivated on April 20.

On reactivation, the subscription will align with the existing billing date of the customer (15th of every month). A prorated charge will be raised for the period from April 20 to May 15.

Subscription with Advance Invoice 

Using advance invoice will set the next billing date based on the number of terms for which advance invoice is raised. In such a case, when billing date is defined, on the next billing date/renewal date, the subscription will be aligned with the billing date.

If any advance invoice has been generated before alignment, the alignment will happen only after the advance charges are exhausted.

Calendar billing is applicable with advance invoices. Advance invoice is generated based on the customer's sign up date. With advance invoicing, the subscription will align with the billing date after the period of advance invoice ends. In such cases, the charge for the adjusted term will be prorated. Such subscriptions are aligned with the billing date when the period of the advance invoice ends. The charge raised on the date the advance invoice period ends will be prorated.

There are three scenarios to be taken into account:

1. During Trial: You can generate an advance invoice for the customer based on their sign up date, even when they're in a trial. The billing date will be aligned when the advance payment made by the customer is exhausted and charge for the adjusted term will be prorated.
2. Immediate change of billing date: When an advance invoice is generated for a set of billing cycles and you want to immediately align the sign-up date with the billing date, the adjusted term will be counted as one billing cycle.
3. Subsequent change of billing date: If the advance invoice is generated for a number of billing cycles, the billing date will be aligned at the end of the last paid cycle.

Coupons and Calendar Billing 

With Calendar billing in place, this is how coupons and discounts will work.

1. One-Time Use Coupon: Say a customer uses a one-time coupon when they are signing up and the billing cycle aligns immediately with the billing date. In this case, they're eligible for a full discount on their charge.

2. Recurring Fixed Amount Coupon: If the customer has a fixed amount coupon that can be used more than once (recurring), the discount given will be prorated based on the adjusted term.

3. Percentage Coupon: If the customer has a percentage coupon, which can be one-time or recurring, the discount given will be applied on the prorated charge.

FAQs 

How does calendar billing work with subscriptions that has a trial period?

A subscription becomes active post completion of the trial. When Billing date is available, the subscription period will align to the billing date. The alignment will happen on the date of activation and the initial period will be set as the date of activation till the upcoming billing date.

How does calendar billing work with subscriptions with 'Future Start'?

When a Future Billing Date is set, the initial charge will be created on activation. The initial charge will be calculated for the period between the date of commencement of subscription (post activation) till the Billing date.

What would be the monthly billing date of customers whose billing date falls on the 31st of the month?

For ‘End of the Month' cases, if a selected date is not present in a month (say, the 31st) for billing, then the preceding date is selected. The renewal shifts back to the original date in the subsequent month, if available.

Example:
The customer has signed up for a subscription that renews on the 31st of every month.
The renewal of the subscription will fall on Jan 31, February 28, March 31 and so on, i.e., the subscription will renew on the last day of the month.