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Align CPQ and Billing Cancellation Based on Billing Periods
Salesforce CPQ and Salesforce Billing use different formulas to calculate proration periods. Depending on your order product’s billing fields, Salesforce Billing sometimes splits your order product’s overall term into more or fewer proration periods than were used in CPQ. When you cancel an order product when CPQ and Billing use different proration periods, a pending balance sometimes remains. If you want to avoid pending balances when you cancel an order product, align CPQ and Billing to use the same proration periods. (Salesforce Billing Managed Package)
Required Editions
| Available in: Salesforce Billing Winter '21 and later |
Based on your proration settings, Salesforce CPQ calculates proration periods based on calendar month. Salesforce Billing calculates proration periods based on the billing period. Salesforce Billing proration periods can vary based on order product billing fields such as billing day of month billing frequency.
These methods can cause differences in prorated period length between the two packages. Period variations cause differences in amended or canceled order amounts and amended or canceled billing amounts.
For example, let’s say you quote a monthly subscription product with a term of 01/16/20 through 04/15/20 and then order and invoice it. CPQ has subscription prorate precision set to Calendar Month + Daily, while Billing has prorate precision set to Calendar Days.
Salesforce Billing calculates periods based on the order product’s Next Billing Date. Next Billing Date can vary based on the order product’s billing day of month, next billing date, billing frequency, and Override Next Billing Date. If your order product has a Billing Day of Month of 7, CPQ and Billing use the following periods.
| Period | CPQ (Calendar Monthly + Daily) | Billing (Calendar Days) |
|---|---|---|
| 1 | January 16–January 31 | January 16–February 6 |
| 2 | February 1–February 29 | February 7–March 6 |
| 3 | March 1–March 31 | March 7–April 6 |
| 4 | April 1–April 15 | April 7–April 15 |
The billing period differences sometimes cause variations between canceled order amounts and canceled billing amounts when you cancel an order product. For example, let’s say our order product has a list price of $1,200. Then, the customer cancels their order product for 03/01.
- Original Order Product Price Calculation
- With Calendar Month + Daily proration, our prorate multiplier is ((16 ÷ 31) + 1 + 1 + (15 ÷ 30)) ÷ 12 = 0.251344.
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Our order product’s list price is $1200, so the unit price is $1200 * 0.2513 = $301.61. Our order product’s billable unit price is $100.
- Billing Field Calculation
- Salesforce Billing calculates the Billed Amount for the first invoice based on the 22-day billing period of January 16 through February 6. Salesforce Billing uses Calendar Days proration to calculate the invoice line’s subtotal, so the first month’s subtotal is (22 ÷ 31) * 1 * $100 = $70.97.
- Because the second invoice covers all of February, the subtotal equals the invoice line unit price of $100.
| Order Product Fields | Before First Invoice | After First Invoice | After second Invoice | After Cancellation |
|---|---|---|---|---|
| Billed Amount | Null | $70.97 | $170.97 | $170.97 |
| Total Billings | $0 | $70.97 | $170.97 | $170.97 |
| Pending Billing Amount | $301.61 | $230.64 | $130.64 | $0.64 |
| Canceled Billing Amount | $0 | $0 | $0 | $170.97 |
Next, let’s cancel the order product. The cancellation process covers the pending billing amount as of 03/01, which is $130.64.
- Cancellation Order Product Price Calculation
- The cancellation order product covers the period of 03/01 through 04/15. The proration multiplier is (1 + (15 ÷ 30)) ÷ 12 = 0.124429.
- The cancellation order product’s prorated unit price is $1200 * 0.124429 = $130.64.
- The cancellation order product’s canceled billing amount is -$130.00.
| Order Product Fields | After Cancellation |
|---|---|
| Billed Amount | Null |
| Total Billings | $0 |
| Pending Billing Amount | -$0.64 |
| Canceled Billing Amount | -$130.00 |
When Salesforce Billing invoices the cancellation order product, the customer receives an invoice for -$0.64, which they can convert into a credit of $0.64.
CPQ and Billing used different billing periods, so your cancellation order product had a pending balance, even though you canceled the remaining period of 03/01 through 04/15. These pending balances can be positive or negative depending on your billing amounts. To cancel an order product and get no pending balances, you can align CPQ and Billing to use the same billing periods.
Aligning with Proration Day of Month
Salesforce CPQ Winter ’21 added the Proration Day of Month (Calendar Monthly + Daily) to the Subscription Prorate Precision package setting. We also added a Proration Day of Month field to the quote. While Proration Day of Month (Calendar Monthly + Daily) is active, Salesforce CPQ calculates proration periods based on quote’s proration day of month. The setting uses the same formula as Calendar Month + Daily to calculate the prorate multipliers.
The proration day of month inherits its value from the quote's start date by default, but you can override it. Let’s repeat the original example but change Subscription Prorate Precision to Proration Day of Month (Calendar Monthly + Daily) and set the quote’s Proration Day of Month to 7. When you order the quote, the order inherits the proration day of month in the billing day of month field. This configuration allows CPQ and Billing to use the same boundary to calculate proration periods.
| Billing Period | CPQ: Proration Day of Month (Calendar Monthly + Daily) | Billing: Calendar Days |
|---|---|---|
| 1 | January 16–February 6 | January 16–February 6 |
| 2 | February 7–March 6 | February 7–March 6 |
| 3 | March 7–April 6 | March 7–April 6 |
| 4 | April 7–April 15 | April 7–April 15 |
- Original Order Product Price Calculation
- With Proration Day of Month (Calendar Monthly + Daily), use the same prorate multiplier calculation formula as Calendar Month + Daily. But the different billing periods result in a slightly different prorate multiplier of ((22 ÷ 31) + 1 + 1 + (9 ÷ 30)) ÷ 12 = 0.250806.
- The order product’s list price is $1,200, so the unit price is $1,200 * 0.250806 = $300.97. Then, the order product’s billable unit price is $100.
- Billing Fields Calculation
- Salesforce Billing calculates the Billed Amount for the first invoice based on the 22-day billing period of January 16 through February 6. Salesforce Billing uses Calendar Days proration to calculate the invoice line’s subtotal, so the first month’s subtotal is (22 ÷ 31)) * 1 * $100 = $70.97.
- Because the second invoice covers all of January, the subtotal equals the invoice line unit price of $100.
| Order Product Fields | Before First Invoice | After First Invoice | After second Invoice | After Cancellation |
|---|---|---|---|---|
| Billed Amount | Null | $70.97 | $170.97 | $170.97 |
| Total Billings | $0.00 | $70.97 | $170.97 | $170.97 |
| Pending Billing Amount | $300.97 | $230.00 | $130.00 | $0.00 |
| Canceled Billing Amount | $0.00 | $0.00 | $0.00 | $130.00 |
Next, let’s cancel the order product. The cancellation process covers the pending billing amount as of 03/01, which is $130.
- Cancellation Order Product Price Calculation
- The cancellation order product covers the period of 03/01 through 04/15. The proration multiplier is 0.1083.
- The cancellation order product’s prorated unit price is $130.
- The cancellation order product’s canceled billing amount is -$130.
| Order Product Fields | After Cancellation |
|---|---|
| Billed Amount | Null |
| Total Billings | $0 |
| Pending Billing Amount | -$0 |
| Canceled Billing Amount | -$130.00 |
Because the proration periods are aligned, the cancellation order product has no pending billings.
- Guidelines for Using Proration Day of Month
If you use the quote’s proration day of month to align CPQ and Billing proration periods, review important guidelines for the Proration Day of Month field. (Salesforce Billing Managed Package)
