Variable quantity usage billing
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With variable quantity billing, the total usage quantity for the contract line is unknown. You bill the customer as they consume the product or service—as in a "pay-as-you-go" model. The usage charge is based on the total quantity used at the end of the billing cycle.
Intacct supports a variety of pricing models, including tiered and range pricing. Depending on the pricing model associated with the selected product or service, the per usage rate can also fluctuate based on the quantity used.
There are no billing or revenue schedules associated with variable quantity usage values. The associated revenue is recognized on invoice. However, the contract line can have a flat/fixed amount, which can cover a defined included usage quantity. This revenue can be deferred.
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.
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.
Before adding a variable quantity contract line
Before adding a variable quantity contract line, you may need to update your billing price list for the desired item.
In order to save a variable quantity contract line, a billing price list with a valid price list entry for the applicable item must be specified on the contract.
Add a variable quantity contract line to a termed contract
A billing price list with a valid entry for the desired item must be specified on the contract in order to save a variable quantity contract line.
Use the billing schedule preview to instantly see the expected billing schedule based on different billing options without affecting contract line journal balances.
| Subscription |
Contracts |
|---|---|
| Regional availability |
|
| User type |
Business |
| Permissions |
Contract: List, View, Add, Edit, Post |
| Dependencies |
The contract must have Term type = Termed. A billing price list with a valid price list entry for the applicable item must be specified on the contract. |
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Do one of the following:
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Add a contract line from the Contracts page:
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Go to Contracts > All > Contracts.
- Find the contract to which you want to add a contract line.
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Select More actions > Edit at the end of the row.
- Select Add located above the top-left corner of the Contract lines grid.
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Add a contract line from the Contract lines page:
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Go to Contracts > All and select Add (circle) next to Contract lines.
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Use the Contract dropdown to select the desired contract.
Intacct populates the page with default information from the selected contract.
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- Use the Item dropdown list to select the desired product or service.
- If applicable, use the calendar tool to select the desired Start and End dates or GL posting date.
- Use the Billing method dropdown list to select Quantity based.
- Select Variable as the Quantity type.
- If the contract line includes a fee for included quantity or a fee for just using the service, do the following:
- Use the Flat/fixed amount frequency dropdown list to select how often to bill the fee.
- If Flat/fixed amount frequency is "Include with every invoice", use the Billing frequency dropdown to select how often the flat/fixed amount should be invoiced.
Update the Flat/fixed amount field as applicable.
The Quantity field in the Calculator is not editable as the quantity represents any included units. Learn more about how the Calculator fields work for variable quantity contract lines.
- Use the Reset usage quantity dropdown list to select when the included units are counted and/or determine when the system billing counter resets. See How the system determines billing quantities for more information.
- If you want the usage quantities to recur, select the Usage quantity recurs checkbox. See Recurring usage for more information.
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Use the Revenue template dropdown lists to select the revenue templates and use the calendar tool to select the desired Start and End dates for each template.
The revenue template is applicable to the flat/fixed amount.
If the flat/fixed amount is 0.00, you can select a revenue template in order to track Billed and Paid usage amounts in the contracts subledger. The revenue template triggers the reclass logic. You can then view these amounts in the contract's Journal balances tab and use them in reporting.
If you don't select a revenue template, the usage values will still be tracked in the GL and will just remain in the Billed Sales Revenue account.
- Use the dropdown lists to select any Dimension values.
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Select Post.
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Do one of the following:
- Open an existing contract in Edit mode. Select Add located above the top-left corner of the Contract lines grid. The Contract Line popup window appears.
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Go to Contracts > All > Contracts and select Add (circle) next to Lines.
In the Contract Line page, use the Contract dropdown list to select the desired contract.
Intacct populates the page with default information from the selected contract.
- Use the Item dropdown list to select the desired product or service.
- If applicable, use the calendar tool to select the desired Start and End dates and/or GL posting date.
- Use the Billing method dropdown list to select Quantity based.
- Select Variable as the Quantity type.
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If the contract line includes a fee for included quantity or a fee for just using the service, do the following:
- Use the Flat/fixed amount frequency dropdown list to select how often to bill the fee.
- If Flat/fixed amount frequency is "Include with every invoice", use the Billing frequency dropdown to select how often the flat/fixed amount should be invoiced.
- Update the Flat/fixed amount field as applicable.
The Quantity field in the Calculator is not editable as the quantity represents any included units. Learn more about how the Calculator fields work for variable quantity contract lines.
- Use the Reset usage quantity dropdown list to select when the included units are counted and/or determine when the system billing counter resets. See How the system determines billing quantities for more information.
- If you want the usage quantities to recur, select the Usage quantity recurs checkbox. See Recurring usage for more information.
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Use the Revenue template dropdown lists to select the revenue templates and use the calendar tool to select the desired Start and End dates for each template.
The revenue template is applicable to the flat/fixed amount.
If the flat/fixed amount is 0.00, you can select a revenue template in order to track Billed and Paid usage amounts in the contracts subledger. The revenue template triggers the reclass logic. You can then view these amounts in the contract's Journal balances tab and use them in reporting.
If you don't select a revenue template, the usage values will still be tracked in the GL and will just remain in the Billed Sales Revenue account.
- Use the dropdown lists to select any Dimension values.
- Select Post.
Learn more about contract line fields.
Add a variable quantity contract line to an evergreen contract
A billing price list with a valid entry for the desired item must be specified on the contract in order to save a variable quantity contract line.
| Subscription |
Contracts |
|---|---|
| Regional availability |
|
| User type |
Business |
| Permissions |
Contract: List, View, Add, Edit, Post |
| Dependencies |
The contract must have Term type = Evergreen. A billing price list with a valid price list entry for the applicable item must be specified on the contract. |
| Configuration |
|
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Do one of the following:
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Add a contract line from the Contracts page:
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Go to Contracts > All > Contracts.
- Find the contract to which you want to add a contract line.
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Select More actions > Edit at the end of the row.
- Select Add located above the top-left corner of the Contract lines grid.
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Add a contract line from the Contract lines page:
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Go to Contracts > All and select Add (circle) next to Contract lines.
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Use the Contract dropdown to select the desired contract.
Intacct populates the page with default information from the selected contract.
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- Use the Item dropdown list to select the desired product or service.
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Optionally, use the calendar tool to select the desired Line start date. The Line start date defaults to today's date. The Line start date cannot be before the "In progress" recurring billing period start date.
If you want to use a Line start date that's in a future recurring period, add the line as "Draft" or "Renewal only".
- Use the Billing method dropdown list to select Quantity based.
- Optionally, select the Prorate partial periods checkbox if you want to bill a partial period for the first recurring billing period. Learn more about partial period proration.
- Use the Calculator fields as applicable to calculate the flat/fixed amount, accept the amount from the billing price list (if applicable), or just enter an amount in the OR Enter amount field.
- If the flat/fixed amount is a value other than 0, use the dropdown list to select the desired Billing frequency.
- Use the dropdown lists to select any Dimension values. Any dimensions that display when you first access this page default from the contract.
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Select Post.
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Do one of the following:
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Open an existing evergreen contract in Edit mode.
Select Add above the top-left corner of the Contract lines grid.
The Contract Line popup window appears.
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Go to Contracts > All > Contracts and select Add (circle) next to Lines.
In the Contract Line page, use the Contract dropdown list to select the desired evergreen contract.
Intacct populates the page with default information from the selected contract.
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- Use the Item dropdown list to select the desired product or service.
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Optionally, use the calendar tool to select the desired Line start date. The Line start date defaults to today's date. The Line start date cannot be before the "In progress" recurring billing period start date.
If you want to use a Line start date that's in a future recurring period, add the line as "Draft" or "Renewal only"..
- Use the Billing method dropdown list to select Quantity based.
- Optionally, select the Prorate partial periods checkbox if you want to bill a partial period for the first recurring billing period. Learn more about partial period proration.
- Use the Calculator fields as applicable to calculate the flat/fixed amount, accept the amount from the billing price list (if applicable), or just enter an amount in the OR Enter amount field.
- If the flat/fixed amount is a value other than 0, use the dropdown list to select the desired Billing frequency.
- Use the dropdown lists to select any Dimension values. Any dimensions that display when you first access this page default from the contract.
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Select Post.
Learn more about contract line fields.
Next steps
