About usage—Contracts

A usage record contains the quantity of a contract line item that a customer used or consumed during a specific time period. You can add usage records manually, import them via a CSV file, or upload them via your company's integration with another business system.

Sage Intacct uses usage records to determine:

  • Quantity-based billing amounts in invoices
  • Quantity-based revenue recognition

Usage amounts post to the GL on invoice, on recognition, and on payment.

Quantity-based billing usage examples

There are two types of quantity-based billing:

Both types of billing depend on usage records to calculate charges. The main difference is that variable quantity usage can be billed at different usage rates and has no lifetime quantity limit, while committed quantity usage is billed at the committed rate up to a specified quantity over the life of the contract line.

Variable quantity billing can include a flat amount that you can bill one-time, in every billing period, or in custom installments. This flat amount can include a given quantity of the item (included units). The included units can be reset for each billing period or only on renewal. When the included units are consumed, the customer is billed at the applicable usage rates if the customer continues to use the item. You can defer the revenue associated with the flat amount.

With committed quantity billing, the billing amount for the billing period = the committed quantity used x the committed rate. When the committed quantity is consumed, you can either let the customer continue to use the item and bill or track overage, or not let the customer continue to use the item. You can defer the revenue associated with the committed flat/fixed amount.

Variable quantity example

Say that your company provides data storage for businesses. You price storage with a flat fee of 100.00 a month that includes 1,000 GB. The price per every additional thousand GB is 95.00 (this is sometimes known as cost per thousand or CPM pricing).

The included units reset each billing period. If the customer does not use all 1,000 GB in a billing period, they still pay the flat amount of 100.00.

You start a contract for your customer, MetroAtlantic Bank, and set up a Quantity-based billing contract line for the storage item. You set the Quantity type to Variable and complete the other required billing information for the contract line.

MetroAtlantic Bank uses 3,000 GB during May. You create a usage record for this quantity and date and associate it with the storage contract line in MetroAtlantic Bank's contract.

When you execute the Generate invoices process for May, the system displays a scheduled billing amount of 100.00. It displays a usage value of 190.00 (3,000 (the quantity used) subtract 1000 (the included quantity) = 2,000, which is 2 sets of 1,000 (2 x 95.00 = 190.00)).

You recognize the 100.00 flat amount per the revenue recognition schedule. The 190.00 usage value is recognized on invoice.

There are no billing or revenue schedules associated with variable quantity usage values.

Committed quantity example

Say that your company provides data storage for businesses. You offer a "save when you commit" model where you charge 0.10 per GB for customers who commit to a volume of 5,000 GB in a given year. You want to bill monthly based on the total usage for the previous billing period, so the customer pays for what they used when they used it. You want to recognize revenue using the Daily rate method.

You start a contract for your customer, Pacific Board World, and add a Quantity-based billing contract line for the data storage item. You set the Quantity type to Committed and choose options for overage and unused quantities at contract completion. When you save the contract line, Intacct automatically generates the revenue schedules based on the flat/fixed amount of 500.00 (5,000 (the committed quantity) x 0.10 (the committed rate) = 500.00).

Pacific Board World uses a total 722 GB in April. You create a usage record for this quantity dated April 30 and associate it with the data storage contract line in Pacific Board World's contract. Intacct multiplies 722 (the quantity used) by 0.10 (the committed rate) and schedules the usage to be billed on April 30, as in the following example:

You can use quantity-based revenue recognition with committed quantity billing.

Quantity-based revenue recognition usage example

With Quantity-based revenue recognition, usage records determine when revenue is available to recognize for a contract line and how much of the revenue you can recognize at that time.

Suppose your company sells ad clicks to Central Software for a total of 24,000 ad clicks for a fixed fee of 1,200.00. Central Software wants to be billed one time for 1,200.00. However, your company reports revenue recognition based on the number of ad clicks used during a month.

You start a contract for Central Software, and associate a quantity-based revenue recognition template to a contract line for ad clicks. This type of revenue recognition is proportionate to the quantity used.

Central Software uses 1,440 ad clicks in September. You create a usage record for this quantity and date and associate it with the ad click contract line in Central Software's contract.

When you execute Preview in the Manage Contract Schedules page to display scheduled revenue recognition for September, Intacct displays a scheduled revenue recognition amount of 72.00 (1,440 (the quantity used) divided by 24,000 (the total contracted quantity) = 6%. 1,200.00 (fixed fee) multiplied by 6% = 72.00).

Learn more about quantity-based revenue recognition.

Usage types

When you add a usage record, Intacct assigns it one of the following usage types:

Usage type Description
Billing - committed

The usage record is associated with a committed quantity contract line.

The usage quantity is used for billing and counts towards the committed quantity. It is billed at the committed quantity rate.
Billing - overage

The usage record is associated with a committed quantity contract line where the committed quantity has been completely consumed and overage is allowed for billing.

The usage quantity is used for billing and is billed at the applicable billing price list rate.
Billing - variable

The usage record is associated with a variable quantity contract line.

The usage quantity is used for billing and is billed at the applicable billing price list rate.
Revenue

The usage record is associated with a quantity-based revenue recognition contract line that may also use committed quantity billing.

The usage quantity is used for quantity-based revenue recognition and may also be used for committed quantity billing.

Tracked - revenue

The usage record is associated with a quantity-based revenue recognition contract line and the total revenue quantity has been used. The contract line may also use committed quantity billing and the "If usage exceeds the committed quantity" field is set to "Do nothing".

You can report on this type of usage, but you can't recognize or bill it.
Tracked - variable

The usage record is associated with a committed quantity contract line where the committed quantity has been completely consumed and the "If usage exceeds the committed quantity" field = "Do nothing".

You can report on this type of usage, but you can't bill it.