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Manage Your Billing Processes with Salesforce Billing
Proration with Invoices

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Proration with Invoices

Salesforce Billing uses proration to calculate balances for invoice lines that cover partial billing periods. The invoice line field Calculated Quantity performs a similar function to the quote line and order product’s Prorate Multiplier fields. (Salesforce Billing Managed Package)

On the invoice line, for subscription pricing, Billable Unit Price (from the order product) * Calculated Quantity = Subtotal.

Calculated Quantity is a proration that captures the number of billable periods on the invoice line. For example, if the invoice line covers one month and Billing Frequency is Monthly, Calculated Quantity = 1.000000.

Similarly, if the invoice line covers three months and Billing Frequency is Quarterly, Calculated Quantity = 1.000000. If the invoice line covers three months and Billing Frequency is Monthly, Calculated Quantity = 3.000000.

The calculated quantity is then used to determine the invoice line’s subtotal (without tax).

Subtotal (without tax) = (Calculated Quantity * OrderProduct.BillableUnitPrice)

Partial Proration Type
The initial setting for determining an invoice line’s calculated quantity. You can select Day or Month + Day.
Day
Salesforce Billing divides the number of days in the invoice line by the number of days in each month within the range of the last billing frequency. For example, you have an invoice line from 10/11/19 through 10/20/19, related to an order product with quarterly billing frequency. The 10-day billing period is divided by the total days in each month of the previous quarter: 31 days in July, 31 days in August, and 30 days in September, or (10 / 92) * quantity 1 = 0.1087.
Month + Day
If you select Month + Day, Salesforce Billing looks at the value of the Proration Type package setting.
Proration Type
Salesforce Billing evaluates this setting only when the partial proration type has a value of Month + Day.
Calendar Days
Use the number of days in the first month of the billing period.
30 Days
Use a flat value of 30 days per month.
Monthly: CPQ Formula
Use the CPQ formula of (365 / 12) days per month.
Example
Example A sales rep quoted and ordered a subscription with a term from 05/23/19 through 09/30/19. Assuming our Billing Day of Month has a value of 1, let’s see how each proration setting would affect the balance of the first invoice line.
Proration Type ValueDescriptionInvoice Line Balance Calculation
Partial Proration Type: Days Use the number of days in the previous billing frequency. The billing frequency is monthly, and the previous month is April, which contains 30 days. ((9 / 30) * 1) = 0.30 * $1000 = $300.
Proration Type: Calendar Days Use the number of days in the first month of the billing period.
  • The first invoice line runs for 9 days, from May 23 through May 31. So, we use ((9 /31) * 1) and multiply that by the order product’s $1000 monthly price to get $290.32.
Proration Type: 30 Days Use a flat value of 30 days per month. ((9 / 30) * 1) = 0.30 * $1000 = $300
Proration Type: Monthly (CPQ Formula) Use the CPQ formula of (365/12) days per month. ((9 / (365/12)) * 1) = $295.89
Example
Example Actions that change an order product’s next billing date affect the length of the invoice line and the prorated invoice line value. Actions could include changing the order’s billing day of month or setting an override next billing date on the order product. Make sure to keep these downstream impacts in mind when you take such actions. Let’s look at a few examples.
Order Product Billing Type: Advance
ActionResultProration Type: CalendarProration Type: Monthly (CPQ Formula)
Keep Billing Day of Month at 1
Next Billing Date
05/01/19
Invoice Line Start Date
05/23/19
Invoice Line End Date
05/31/19
 (09 / 31) * $1000 = $290.32 (9 / (365 / 12)) = 0.2959 * $1000 = $295.89
Change Billing Day of Month to 11
Next Billing Date
05/11/19
Invoice Line Start Date
05/23/19
Invoice Line End Date
06/10/19

The first month of our period is May, so divide the 19 total days by the 31 days in May.

((19 / 31 * $1000) = $612.90

 (19 / (365 / 12)) * $1000 = $624.66
Change Billing Day of Month to 30
Next Billing Date
05/30/19
Invoice Line Start Date
05/23/19
Invoice Line End Date
05/29/19
 (7 / 31) * $1000 = $225.80 (7 / (365 / 12)) * $1000 = $230.14
If we bill in arrears, the invoice lines have the same value. The next billing date is the only difference — keep this in mind when configuring your invoice runs.
Order Product Billing Type: Arrears
ActionResultProration Type: CalendarProration Type: Monthly (CPQ Formula)
Keep Billing Day of Month at 1
Next Billing Date
06/01/19
Invoice Line Start Date
05/23/19
Invoice Line End Date
05/31/19
 (09 / 31) * $1000 = $290.32 (9 / (365 / 12)) = 0.2959 * $1000 = $295.89
Change Billing Day of Month to 11
Next Billing Date
06/11/19
Invoice Line Start Date
05/23/19
Invoice Line End Date
06/10/19

The first month of our period is May, so divide the 19 total days by the 31 days in May.

((19 / 31 * $1000) = $612.90

 (19 / (365 / 12)) * $1000 = $624.66
Change Billing Day of Month to 30
Next Billing Date
05/30/19
Invoice Line Start Date
05/23/19
Invoice Line End Date
05/29/19
 (7 / 31) * $1000 = $225.80 (7 / (365 / 12)) * $1000 = $230.14
Example
Example When billing semi-annual products, the proration calculation adjusts charges based on the Billing Day of Month. The proration multiplier determines the proportion of the billing period used, directly impacting the final invoice amount. Let’s look at a few examples.
Action Result Calculated Quantity Prorated Charge (on $6,000)

Billing Day of Month at 1

Billing Period: 10/28/19 to 3/31/20
Breakdown
10/28/19 to 11/27/19 is 1 month
11/28/19 to 3/27/20 is 4 months
3/28/20 to 3/31/20 is partial month, 4 days / 31 days = 0.12903226

For a semi-annual calculation, we divide by 6.

((1 + 4 + 0.12903226) / 6 = 0.85483871

 0.85483871×6000 = $5129.03

Billing Day of Month to 11

Billing Period: 10/10/19 to 3/9/20
Breakdown
10/10/19 to 10/31/19 is partial month, (22 days / 31 days) = 0.70967742
11/1/19 to 2/29/20 is 4 months
3/1/20 to 3/9/20 is partial month, (9 days / 31 days) = 0.29032258

For a semi-annual calculation, we divide by 6.

(0.70967742 + 4 + 0.29032258) / 6 = 0.83333333

 0.83333333×6000 = $5000
 
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