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. 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 contract period.

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:

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. Select the Prepayments tab.

4. On the Active and pending prepayments panel, select Create prepayment. The Create page opens.

5. Enter the details of the Prepayment:

  • Start date and End date. Use the popup calendars to select:

    • End dates are exclusive. For example, if you set the End date of June 1st 2022, then the Prepayment ceases to be active for the Account at midnight on May 31st 2022, and any prepayment fees due are calculated up to that point in time, NOT up to midnight on June 1st.

  • Products. Use the drop-down to select any Products to which you want to apply the Prepayment. (Optional)

  • Accounting product. Use the drop-down to select a Product - if your accounting operations require it, you can use this to link the Prepayment on the account to a particular Product.(Optional)

  • Contract. 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. (Optional)

  • Currency. Use the drop-down list to select the currency you want to use for the Prepayment.

  • Amount. Enter the Prepayment amount.

  • Amount pre-paid. Enter the amount that is to be pre-paid. If nothing is to be pre-paid, then leave Amount pre-paid as 0.

6. Since in this example, nothing is pre-paid against the Prepayment amount, you'll have to configure how you want to bill against the Prepayment for this Account. Two options:

Tip: Billing Panel Disabled? If the Amount pre-paid is greater than or equal to the Prepayment Amount, then Billing details are not required and the Billing panel is disabled.

7. Enter the remaining settings:

  • Usage description. Optionally, enter a description used for Bill line items for Prepayment usage.

  • Overage surcharge (%). Optionally, enter a value for the additional surcharge (in percent) added to bills for overages on the Prepayment:

    • Note that 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 description to be used for Bill line items for Prepayment overage surcharge.

Tip: Prepayments overage pricing? If, and only if, you are using a tiered pricing structure when pricing Plans, you might want to set up overage pricing bands for Balance/Prepayment overage pricing, and instead of using a percentage addition/reduction on the standard pricing for usage. 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 Managing your Organization.

8. Select Create Prepayment. You are returned to the Account page Prepayments tab, where the Prepayment is listed on the Active and pending prepayments panel:

Tip: Reviewing Prepayments? You can open a 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 you can select to Bill with plan for the outstanding Prepayment amount. The Billing panel adjusts and you can enter billing details for adding line items (the Prepayment fee) 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.

  • First bill date. Allows you to set a date when this Prepayment will first appear on a bill. The dates of all future bills for Prepayment fees will be calculated from this initial date. If you leave this blank then the start of billing defaults to the Epoch setting you've configured for your Organization - see Managing your Organization.

  • 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 applied. 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. By default, the setting you've configured at Organizational-level is checked to be used. You can uncheck this and use the switch to set billing in arrears/in advance for the Prepayment.

  • Fee description. Optionally, enter a description used for Bill line items for Prepayment fees.

  • 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 Prepayment fee drawdown for the Parent Account and Child Accounts:

    • Drawdown parent account - bill line item per account. Default setting.

    • Drawdown parent account - single bill line item for all accounts.

    • Drawdown child account.

    Note that these options are only operative if the Account is a Parent or Child Account. For a full explanation of what each option means, see Billing Hierarchy Modes for Parent/Child Accounts - the way in which billing is handled for drawdown against Prepayments as between Parent and Child Accounts will follow the billing hierarchy mode options as explained here.

Prepayment Billing on a Schedule

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 you can select to Bill on a schedule for the outstanding Prepayment amount. The Billing 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 and Service period end. 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. Optionally, enter a Fee Description to appear against Bill line items for Prepayment fees.

4. If the Account is either a Parent or a Child Account, you can use the Account hierarchy drawdown mode options to select how billing will be handled and shown on bills for Prepayment fee drawdown for the Parent Account and Child Accounts:

  • Drawdown parent account - bill line item per account. Default setting.

  • Drawdown parent account - single bill line item for all accounts.

  • Drawdown child account.

Note that these options are only operative if the Account is a Parent or Child Account. For a full explanation of what each option means, see Billing Hierarchy Modes for Parent/Child Accounts - the way in which billing is handled for drawdown against Prepayments as between Parent and Child Accounts will follow the billing hierarchy mode options as explained here.

Tip: 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.

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 fee details and fee billing dates.

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, including Fee details and Fee Dates for the Prepayment:

5. 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. On the Active and pending prepayments panel any Prepayments created for the Account are shown.

3. 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.

4. Edit the details as required for the duplicate.

5. Select Create Prepayment. You are returned to the Overview tab and the duplicate Prepayment is listed.

Tip: Prepayments tab? You can also duplicate a Prepayment from the Prepayments tab in the same way.

Next: Creating Contracts for Accounts