Creating Prepayments for Accounts
You can apply a Prepayment/Commitment to an end customer Account for cases where the end customer has agreed to pay a fixed amount over the duration of their contract with you to consume one or more of your products or services. The amount is understood as payable regardless of the actual usage they become liable to pay for during the contract period. However, a Prepayment contrasts with a simple agreed minimum spend amount defined for an Account, since an agreed minimum spend will typically be assessed on a bill-by-bill basis whereas the Prepayment spans across multiple bills for the entire contract period.
Depending on the payment use case you want to implement, you can exploit various configuration options when setting up Prepayments for your end-customer Accounts:
If not all of an agreed Prepayment amount is paid at the start of a customer service period, you can choose one of two options for billing the outstanding fees due:
Select a Product Plan to bill with.
Defined a schedule of billing dates.
When setting up a Prepayment on an Account, you can include a surcharge rate to be applied for any overage on the Prepayment amount that occurs during the service period.
Tip: Balances and Prepayments/Commitments? You can use both Balances and Prepayments to help manage credit amounts for your end-customer Accounts, but they serve different purposes.
Prepayments are used for amounts end-customers have agreed to pay for consuming your product or services across a full contract term. In contrast, a Balance - often referred to as a Top-Up or Prepaid draw-down - is used when a customer wants to add a credit amount to their Account or you as service provider want to add a credit to a customer Account. This Balance credit can then be drawn-down against for billing the Account for usage. Balances therefore serve payment use cases in a more flexible way, for example to be used as a "Free Credit" sign-up scheme to encourage sales or to enhance customer satisfaction by adding credit to an Account when there have been issues delivering your service.
You can use Prepayments and Balances together, with the option to draw-down against the Balance credit amount before or after any Prepayment amounts on an Account. See below Prepayments Draw-Down Order Against Balances.
This topic provides an example to illustrate how any Prepayments/Commitments you apply to a customer Account will be handled in m3ter for Billing against the Account, and explains how you can create Prepayments for your customer Accounts:
When you have created Prepayments for Accounts, you can open a details page to check fees and usage details, fee dates, and review a chart that tracks the consumption of the Prepayment over the active period for the Account:
If you want to renew a contract with an existing end customer Account and want to include a Prepayment in the customer's contract renewal, you can quickly duplicate either an active or pending Prepayment you've already created for the Account:
If you have added both Prepayment and Balance credit amounts to an Account, you can define the order in which these credits amount are drawn-down against for billing the Account:
Example Prepayment
Suppose you have a customer who has agreed to pay a fixed amount over a year's contract for one of your products, say $15,000, and to pay this total incrementally over the 12-month term in equal monthly billed amounts of $1,250. You charge for your product on the basis of transactions at a rate of $0.46 per transaction. The customer also agrees to pay a surcharge of 1% for any transactions payable over the agreed Prepayment amount:
Month 1. The Account logs 20,000 transactions. At $0.46 per transaction this comes to $9,200 chargeable. This usage remains below the agreed Prepayment for the Account, so the transactions charge for usage is $0. However, the regular monthly amount of $1,250 is still due and the Bill for this first month is issued in this amount.
Month 2. The Account makes another 20,000 transactions. At $0.46 per transaction this comes to a further $9,200 chargeable. The total chargeable is therefore $18,400, which exceeds the Prepayment amount by $3,400. Since a surcharge on any overage of 1% was agreed, this becomes $3,434. So the Bill for this second month is issued in the amount of: $1,250 + $3,434 = $4,684.
Month 3. The Account makes another 20,000 transactions. At $0.46 per transaction this comes to a further $9,200 chargeable. The cumulative chargeable over the three-month period is now $27,600, which exceeds the Prepayment amount by $12,600. The monthly overage for this month is $12,600 - $3,400 = $9,200, since month two's overage of $3,400 was charged under that month's Bill. With the overage surcharge applied, this month's usage charge is $9,292. So the Bill for this month is issued in the amount of: $1,250 + $9,292 = $10,542.
Creating Prepayments
You can create Prepayments for an end customer Account from the Account page.
To create a Prepayment for an Account:
1. Select Accounts. The Accounts page opens.
2. Select the Name text of the Account for which you want to create a Prepayment. The Account page opens.
3. On the Account actions menu, select Prepayments>Create prepayment:
Alternatively:
Select the Prepayments tab.
On the Active and pending prepayments panel, select Create prepayment.
The Create page opens.
Warning: You must create at least one Currency for your Organization before you can create a Prepayment! If you haven't, the Create page will not open and you'll see a warning:
Select the Manage currencies hotlink text provided. This takes you directly to the Create page to create the Currency you want to use for the Prepayment. See Creating and Managing Currencies.
When you create the new Currency, you are taken directly back to the Prepayment Create page and the Currency is selected.
4. Enter the required Prepayment details:
Start date (inclusive) and End date (exclusive). Use the popup calendars to select. (Required)
Note that the end date is treated exclusively and will be applied as midnight of the selected date, where midnight is understood as the start of that date. This means that if you set the End date of June 1st 2022, then the Prepayment ceases to be active for the Account at the end of May 31st 2022, and any prepayment fees due are calculated up to that point in time.
Accounting product. Use the drop-down to select a Product. (Required)
You can use this to link the Prepayment on the Account to a particular Product for accounting purposes:
If you omit a Draw-downs accounting product for Prepayment drawdown, then the Accounting product will be used for Prepayment consumed line items on Bills.
If you omit a Fees accounting product when setting up billing for the Prepayment - either for billing with a Plan or on a Schedule - then the Accounting product will be used for Prepayment fee line items on Bills.
Important! If you're planning to set up an integration for sending Bills to an external accounts receivable system, please check requirements for your chosen system. Some systems, such as NetSuite, require a Product to be linked with any Bill line items associated with Account Prepayments, and the integration will fail if this is not present.
Currency. Use the drop-down list to select the currency you want to use for the Prepayment. (Required)
Contract. (Optional) If you want to add the Prepayment to a Contract you've created for the Account, use the drop-down to select it. For more details on Contracts, see Creating Contracts for Accounts.
Important: Linking Prepayment to Contract - Optional or Mandatory? Whether you need to link a Prepayment on an Account to a Contract is dependent on whether or not an Account Plan on the same Account has been linked to a Contract:
No Contract linked to Account Plan on the Account. Linking the Prepayment to a Contract is Optional, as required by your accounting purposes.
A Contract is linked to an Account Plan on the Account. Prepayment Contract and Account Plan Contract must match. If you associate the Prepayment with a Contract you must ensure the Account Plan attached to the Account has the same Contract linked to it. If the Account Plan Contract and Prepayment Contract do not match, then at billing the Prepayment amount will not be drawn-down against.
5. Enter the Billing configuration settings.
Amount. Enter the Prepayment amount. (Required)
Fully prepaid:
Enable this switch if the Prepayment is to be fully prepaid. The Billing Configuration panel will close since you don't need to set up billing for any remainder amount that has not been prepaid. Move to Step 6 below for Prepayment Restrictions.
Leave this switch disabled if only some or none of the Prepayment amount is to be prepaid. The Billing Configuration panel remains open ready for you to set up billing for the remainder amount of the Prepayment amount minus any prepaid amount. Default setting.
Since in this example, nothing is prepaid against the Prepayment amount, you'll have to configure how you want to bill against the Prepayment for this Account. Two options:
Bill with plan. See following section for Prepayment Billing with Plan.
Bill on a schedule. See following section for Prepayment Billing on a Schedule.
Amount pre-paid. Enter the amount prepaid against the Prepayment.
6. Enter Prepayment drawdown settings, which are optional:
Draw-down Products. Use the drop-down to select any Products to which you want to apply the Prepayment.
Note: If you don't select any Products for draw-down, by default the charges for any Product consumed by the Account will be drawn-down against the Prepayment amount.
Draw-down charge types. Use the drop-down to select the types of charge that can draw-down against the Prepayment amount when the Account is billed. Five options:
Minimum spend
Standing charge
Usage
Counter running total charge
Counter adjustment debit
Note: If you leave the Draw-down charge types field empty, then charges due at billing for any of the charge types can be drawn-down against.
Draw-downs accounting product. For accounting purposes, select a Product that will be linked to any Prepayment consumed line items on Bills. (Optional)
Note that if you leave this blank, then the Accounting product selected for the Prepayment will be used instead.
7. Enter the remaining Usage settings, which are optional:
Usage description. Enter a custom description used for Bill line items for Prepayment consumption for usage.
Note that if you leave this blank, then a default description will be used. See Bill Line Items - Default Descriptions for details.
Overage surcharge (%). Enter a value for the additional surcharge (in percent) added to bills for overages on the Prepayment:
Note: You can enter a negative percentage if you want to give a discount rate for usage to end customers who exceed their Prepayment amount.
Overage description. Optionally, enter a custom description to be used for Bill line items for Prepayment overage surcharge:
Note that if you leave this blank, then a default description will be used. See Bill Line Items - Default Descriptions for details.
Overage usage. If you have not entered a value for Overage surcharge (%) or you have entered a value of 0, you can use a switch to enable Separate bill line item for overage usage on Bills. This means that if a Prepayment amount has been consumed by an Account, any subsequent line items on Bills against the Account for usage will show as separate "overage usage" charges, not simply as "usage" charges. Note:
If you have entered a value other than 0 in the Overage surcharge (%) field, then this option will be grayed out and unavailable.
If you have set up overage pricing on a tiered pricing structure when pricing a Plan that will apply to billing for the Prepayment and you enable Separate bill line item for overage usage, then overage usage charges for separate line items will be rated according to this overage pricing.
Account hierarchy drawdown mode. If the Account is either a Parent or a Child Account, you can select how billing will be handled and shown on bills for charges due for the Parent Account and charges due for Child Accounts:
Bill parent account - bill line item per account. Default setting.
Bill parent account - single bill line item for all accounts.
Bill child account.
Important!
Only Operative for Parent/Child Accounts. The Account hierarchy billing mode options are only operative if the Account is a Parent or Child Account. For a full explanation of what each means, see Billing Hierarchy Modes for Parent/Child Accounts.
Parent/Child billing for Recurring Charges not supported. If you price a Plan using a Counter to apply unit-based pricing for recurring subscription charges and attach the Plan to Parent or Child Accounts, Parent/Child billing is not supported for the recurring charges.
Important! Prepayment Overage surcharge percentage overrides Prepayment Overage pricing. If you have set up overage pricing on a tiered pricing structure when pricing a Plan that will apply to billing for the Prepayment and you have also set up overage surcharge percentage when creating the Prepayment for an Account, any overage usage charges on the Account will be billed at the overage surcharge percentage rate and the Prepayment overage pricing will be ignored. See Creating Pricing for a Plan.
Tip: Prepayment/Commitment fee - billing in arrears or in advance? You can configure this at the Organizational level - see Viewing and Editing Organization Configuration.
8. Select Create prepayment. You are returned to the Prepayments tab, where the Prepayment is listed on the Active and pending prepayments panel:
Tip: Reviewing Prepayments? At any time, you can open the Prepayment Details page for a Prepayment/Commitment on an Account - see below, Viewing Prepayment Details. Also, you can query for Prepayments and review the returned data using the Data Explorer. See Performing Prepayments Queries and Reviewing Results.
Prepayment Billing with a Plan
If the customer Account has opted not to pay the agreed Prepayment in total upfront and the Amount pre-paid is less than the Prepayment Amount, then under Billing for remaining you can select to Bill with plan for the outstanding Prepayment amount. The Billing Configuration panel adjusts and you can enter billing details for adding line items for Prepayment fees to Bills in each billing period over the duration of the Prepayment:
Plan. Use the drop-down to select which pricing Plan you want the Prepayment fees to be added for billing purposes. Note that this is to allow for cases where a customer Account has been placed on more than one pricing Plan, some of which are billed weekly and some of which are billed monthly.
First bill fee. Enter a Prepayment fee amount to be paid in the first Bill. The remainder due under the Prepayment will be evenly split across subsequent Bills up to the end of the Prepayment contract period.
Billing cycle date. Optional setting, which sets the date when the first Bill is created and acts as a reference for when in the applied billing frequency period subsequent bills for the Account are created:
For example, suppose a Plan is configured for monthly billing frequency. You then set a Billing cycle date of February 15th, 2022. The first Bill will be created for the Account on February 15th, and subsequent Bills created on the 15th of the months following for the remainder of the billing period - March 15th, April 15th, and so on.
If you leave this blank, then Epoch dates from your Organization's configuration will be used as the Billing cycle date for the Account instead - see Viewing and Editing Organization Configuration.
Fee billing interval. How often the Prepayment fees are applied to bills. For example, if the plan you've selected using the Bill with plan setting means that bills are issued every three months and the Fee billing interval is set to 2, then the Prepayment fees are applied every six months.
Fee billing offset. Defines an offset for when the Prepayment fees are first applied to bills on the Account. For example, if the bill is issued every three months and the Fee billing offset is set to 0, then the charge is applied to the first bill (at three months); if set to 1, it would be applied to the next bill (at six months), and so on.
Fee billing. Allows you to control whether any Prepayment fees due are billed in arrears or in advance:
Use organization-wide configuration. Default selection. If enabled, the setting selected at Organization level for Fee billing will be used - it will be shown in brackets. If you select either of the other two options, the Organization level setting will be overridden. See Viewing and Editing Organization Configuration.
Bill in arrears (end of each billing period)
Bill in advance (start of each billing period)
Fees accounting product. For accounting purposes, select a Product that will be linked to any Prepayment fee line items on Bills. (Optional)
Note that if you leave this blank, then the Accounting product selected for the Prepayment will be used instead.
Fee description. Optionally, enter a custom description used for Bill line items for Prepayment fees.
Note that if you leave this blank, then a default description will be used. See Bill Line Items - Default Descriptions for details.
Warning: Ensure Prepayment service period extends for required Billing Period! If you choose to Bill with plan for any outstanding Prepayment fees, please ensure the Prepayment service period you define extends over the full billing period required for your Prepayment billing use case. See the Billing Dates Issues section of the Troubleshooting Bills topic for an example where this can go wrong and give unexpected Bill amounts.
Prepayment Billing on a Schedule
If the customer Account has opted not to pay the agreed Prepayment in total upfront and the Amount prepaid is less than the Prepayment Amount, then you can select to Bill on a schedule for the outstanding Prepayment amount. The Billing Configuration panel adjusts and you can set up a schedule for Bill dates where each Bill covers a portion of the outstanding Prepayment amount which will be used to cover usage for a defined service period.
Important! The total of the scheduled Bill amounts should equal the outstanding Prepayment amount. If they don't, you won't be able to save the Prepayment and you'll receive an error message.
1. Select Add. The Billing panel adjusts to allow you to enter the details of the first Bill:
Date. Use the calendar pop-up to select the date of the first Bill.
Amount. Enter the portion of the outstanding Prepayment amount that will be allocated for usage recorded during the defined service period of the first Bill.
Service period start date (inclusive) and Service period end date (exclusive). Use the calendar pop-up to set the service period for the first Bill.
2. If you want to set up subsequent Bills for the schedule, select Add again and repeat step 1.
In this example, where the Prepayment spans two calendar years, we've set up a Bill schedule for two billing dates, each covering half of the outstanding Prepayment amount - one at the outset for the first year; the second on December 1st, which is a month before the second service period for billing commences on January 1st of the second calendar year.
3. Optional settings:
Fees accounting product. For accounting purposes, select a Product that will be linked to any Prepayment fee line items on Bills.
Note that if you leave this blank, then the Accounting product selected for the Prepayment will be used instead.
Fee description. Enter a custom description, which will appear against Bill line items for Prepayment fees.
Note that if you leave this blank, then a default description will be used. See Bill Line Items - Default Descriptions for details.
Important! Billing for Prepayments on a Schedule - please note:
Adjusting Prepayment Schedule after generating Bills? Suppose you've set up a schedule for Prepayment billing for an Account and a Bill has already been generated for one of the Prepayment fee dates on that schedule, a Bill that might also includes usage charges for priced Plans attached to the Account. If you then change the dates for the Prepayment schedule, when you recalculate the existing Bill the Prepayment fee due under the original schedule will still be included. You must first delete the old Bill generated for the original Prepayment fee schedule and then run billing again - the new Bill will then be generated in accordance with the updated Prepayment schedule. If you are using Scheduled Billing, please ensure you check for this after updating a Prepayment schedule.
Usage charges exceed Prepayment amount? If the Account you've created the Prepayment for has a priced Account Plan attached and the usage chargeable under the Account Plan exceeds the Prepayment amount charged for a service period on a scheduled Bill, then subsequent Bills will include the required Prepayment overage charges. To extend the example, if the Account uses a monthly frequency Account Plan and, by the first few days into July 2024, usage recorded on the Account begins to exceed the $7, 500 Prepayment billed in advance on the 1st December 2023 for the 2024 service period, then the remaining Bills for that year - July through December - will show Prepayment overage line items for any usage throughout those months.
Service period start and end dates for scheduled Prepayment fee billing dates:
If you try to set the Service period start date (inclusive) after the Service period end date (excusive), then you'll receive an error.
You can set the Service period start date (inclusive) and the Service period end date (exclusive) to the same date without receiving an error, but please be sure your Prepayment billing use case requires this.
Viewing Prepayment Details
If you want to review a Prepayment on an Account, you can do this directly from the Prepayments tab. A details page opens where you can also view:
Fees and Usage
Fee Dates
Prepayment Consumption
To view Prepayment details:
1. Select Accounts. The Accounts page opens.
2. Select the Account for which you want to view the details of a Prepayment. The Account page opens with the Overview tab selected.
3. Select the Prepayments tab. The page adjusts and shows any active, pending, or previous Prepayments created for the Account.
4. Select the Amount text of the Prepayment whose details you want to review:
In this example, we've selected to open the details for an ACTIVE Prepayment on an Account. The Prepayment details page opens, where you can review the Prepayment - which user Created and which user Last modified the Prepayment, Fees and usage details, and Fee dates. For example:
5. If consumption data is available for the Prepayment, you can scroll down the details page and review a Prepayment consumption chart that shows:
Consumption to date with consumption trend.
Minimum expected consumption over the entire active period.
The percentage active period passed against the percentage amount consumed to date.
Here's an example:
Note that when viewing the consumption chart, you can:
Zoom the chart in or out and reset zoom.
Use the menu at top-right for options to download the chart in either
.svgor.pngfile format.
6. If you scroll further down the page, you can review Prepayment metadata:
Custom Fields created for the Prepayment.
External mappings created for the Prepayment. Note that you can start a Create external mapping workflow directly from here. See Creating and Managing External Mappings for Accounts for an example.
7. When you are finished viewing details, you can select to return to the main Prepayments tab.
Duplicating Prepayments
You can duplicate a Prepayment/Commitment you've created for an Account. This is useful if you want to renew a contract with an end-customer Account and again include a Prepayment amount in the contract but adjust some of the details, such as renew with reduced Prepayment. You can do this for either an Active or a Pending Prepayment.
To duplicate a Prepayment for an Account:
1. Select Accounts. The Accounts page opens.
2. Select the Name text of the Account for which you want to create a Prepayment. The Account page opens with the Overview tab selected.
3. Select the Prepayments tab. On the Active and pending prepayments panel any active or pending Prepayments created for the Account are shown.
4. Select Duplicate for the Prepayment you want to duplicate for the Account:
The Create page opens and the details of the existing Prepayment are shown.
5. Edit the details as required for the duplicate.
6. Select Create prepayment. You are returned to the Prepayments tab and the duplicate Prepayment is listed.
Tip: Overview tab? You can also duplicate a Prepayment from the Overview tab in the same way using the Active and pending prepayments panel.
Prepayments Draw-Down Order Against Balances
If you have added Prepayments and Balances as credits on an Account, you can define the order in which these credit amounts are drawn-down for billing the Account. Four options are available for this credit application order for Prepayments against Balances:
Prepayment then balance. Draw-down against Prepayment credit before Balance credit. Default.
Balance then prepayment. Draw-down against Balance credit before Prepayment credit.
Prepayment only. Only draw-down against Prepayment credit.
Balance only. Only draw-down against Balance credit.
You can configure this in two places:
At Organization level as part of your Organization configuration. See Viewing and Editing Organization Configuration.
At individual Account level when creating or editing the Account to which the Prepayments and Balances have been added under Bill settings. See Creating an Account.
If you configure this at Account level, the Account level setting takes precedence over any setting at Organizational level.
Important! If the Account belongs to a Parent/Child Account hierarchy, then the Credit application order settings are not available, and the draw-down order defaults always to Prepayment then Balance order.
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