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Manage Your Billing Processes with Salesforce Billing
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            Aligning Proration Between CPQ and Billing

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            Aligning Proration Between CPQ and Billing

            When you use CPQ and Billing together, we recommend aligning CPQ’s Subscription Proration Precision with Billing’s Proration Type. Otherwise, the proration methods can cause unwanted differences between an invoice line’s balance and the customer’s expected billings based on the product’s price. (Salesforce Billing Managed Package)

            Required Editions

            Available in: Salesforce Billing 212.5 and later

            Let’s start out by examining an order product billed $1000 monthly in arrears for a 12-month term. CPQ uses Monthly + Daily proration settings, while Billing uses Calendar Days. A sales rep quotes it for 04/23 through 09/30/19, then orders and invoices it.

            Example 1

            In (1), the first billing period in April is prorated to run from 04/23/19 through 04/30/19. This period represents one difference in proration between CPQ and Billing - when CPQ calculated proration, it counted forward by month starting on 04/23/19. We moved through 7 whole months and used 09/23 through 09/30 as our final period for calculating proration. However, Billing prorates based on when the order product invoices: Since we’re billing monthly in advance, our first period for proration is 04/23 through 04/30.

            Moving through the next four full months of invoicing at $1000 per month, we arrive at a total of $4,266.67 (2). The final billing period of 09/01 through 09/30 must cover the order product’s remaining balance, so the invoice line has a total balance of $996.34 (3).

            However, this balance represents the discrepancy from the current proration configurations: The product had a monthly price of $1000, yet the billing is at $996.34 for the full month of September. Even though the invoice lines add up to $5,263.01 like the order product’s total, most customers would expect to pay the product’s price of $1000 per month in a full, non-prorated month.

            Alignment Option 1

            Our best option for alignment is to continue using Monthly + Daily proration in CPQ while changing our Billing proration type to Monthly (CPQ Formula). While this value is active, Billing uses (365/12) as the length of a month. Let’s see what happens Months (CPQ Method) is active in our same example.

            example 2

            In this case, the first period (1) has a prorated balance of $263.01. The next four full months bring the total to $4263.01. Now, the remaining balance in September (2) is $1000, aligning with the expected charge based on the product’s original price of $12000 over 12 months.

            Aligning for Terms with Start and End Months of Different Lengths

            Make sure to account for differences in month lengths when configuring proration between CPQ and Billing. If the first and last billing periods are in months with different lengths, the final billing period still differs from the product’s monthly price even when proration methods are aligned.

            Let’s return to the first example of the same product, but quoted from 05/23/19 through 09/30/19. In this case, the initial billing period lasts for 9/31 days, producing a slightly larger value than 8/30. This larger billing period, alongside the shorter final month length in September, means that the final billing period has a smaller remaining balance to invoice.

            example 3

            When we change Salesforce Billing’s prorate type to CPQ Method, our final invoice line has a slightly larger difference from the monthly rate of $1000.

            example 4

             
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