Recurring usage

This topic is only applicable to termed contracts. A termed contract has both start and end dates.

If you have a variable quantity usage billing contract line for which you will bill a specific quantity of an item on a regular basis, you can set up the contract line with recurring usage.

About recurring usage

In the Contracts application, indicate that Usage quantity recurs on the variable quantity contract line, enter the usage record once for the contract line, and then the system creates a usage record for the recurring quantity for each subsequent billing period as defined by the price parameters. You must have a billing price list entry in the applicable billing price list for the item for which you want to bill recurring quantities.

If you need to change the recurring usage quantity, you create another usage record for the contract line that contains a positive or negative quantity that when combined with the original usage quantity will equal the desired quantity.

Revenue for recurring usage is recognized immediately on invoice, so there is no revenue schedule. The recurring usage invoice debits Billed Accounts Receivable and credits Billed Sales Revenue. You can't use recurring usage on contract lines that use Quantity-based revenue recognition.

Recurring usage example

Let's say your company sells monthly user licenses for your software. On January 1, a new customer, Pacific Board Shop, places an order for 5 user licenses at 25.00 each for a 12-month term, January 1 - December 31. You create a contract for Pacific Board Shop and add a variable quantity contract line for the software item. In the contract line's Billing section, you select the Usage quantity recurs checkbox and select "After every invoice" as the Reset usage quantity option. Then you add a usage record with a quantity of 5 for January.

When you generate Pacific Board Shop's invoice in January, the invoice shows a usage quantity of 5 with an invoice amount of 125.00.

In February, you don't need to create a usage record. When you generate Pacific Board Shop's invoice in February, the invoice shows a usage quantity of 5 with an invoice amount of 125.00. On the invoice event, the system automatically creates a usage record for the recurring quantity of 5 with a recurring usage date of February.

In March, Pacific Board Shop calls and wants to reduce the number of licenses to 4 starting in April. You add a usage record to the software contract line that has a usage quantity of -1 for April. When you generate Pacific Board shop's invoice in April, the system creates a usage record for the recurring quantity of 5. The invoice shows a usage quantity of 4 with an invoice amount of 100.00.

When you generate Pacific Board Shop's invoice in May, the invoice shows a usage quantity of 4 with an invoice amount of 100.00. On invoice, the system creates two usage records: one for 5 and one for -1.

Set up recurring usage

1. Add a price list entry for the desired item to the applicable billing price list. Note the following:
   • Recurring usage is usually priced as Tiered pricing, but you can use Range pricing if desired.
   • If you are using Tiered pricing, you must specify at least one tier rate.
   • The selected Usage quantity recurs and Reset usage quantity options will default on the contract line for the item, which the user can change as applicable.
   • See examples 3 and 4 in How the system determines billing quantities for information on how the pricing parameters work together for recurring usage.
2. If this is a new contract, create the contract and select the applicable Billing price list. If the contract lines will use a Flat/fixed amount frequency of One-time or Use-billing template, select a Billing frequency on the contract to determine how often the usage recurs.
3. Add a contract line for the applicable item to the contract. Note the following:
   • The Billing method must be Quantity based and the Quantity type must be Variable.
   • Make sure the Usage quantity recurs checkbox is selected.
   • The Flat/Fixed amount can be zero. If the Flat/Fixed amount is zero, the contract line will not have revenue schedules as the revenue is recognized on invoice for usage. However, you still need to select at least one Daily rate or Straight line revenue template in order to save the contract line.
   • If the Flat/fixed amount frequency = Include with every invoice, select a Billing frequency on the contract line to determine how often the usage recurs.
4. Add a usage record for the recurring quantity. The Usage date should be within the billing period in which you want the usage to start being billed.

   The system will use the same day of the month for the Recur usage date for each subsequent recurring usage record. For example, if you use January 15 as the Usage date for the initial recurring usage record and the Billing frequency is monthly, the system will set the Recur usage date for the subsequent recurring usage record to February 15.

Adjust the recurring usage quantity

If the initial recurring usage record has not been invoiced, you can edit the usage record as needed.

If the initial recurring usage record has been invoiced and you want to change the recurring quantity, add another usage record with a positive or negative quantity that when combined with the existing recurring usage records will equal the desired quantity.

For example, if the current recurring usage quantity is 5 and you want to change it to 3, add a usage record with a quantity of -2 to the contract line. If the recurring usage quantity is 5 and you want to change it to 8, add a usage record with a quantity of 3 to the contract line.

The usage date for the adjusting usage record should be in the billing period in which you want the change to occur.

Delete recurring usage

If the initial recurring usage record has not been invoiced, you can delete the usage record as needed.

If the initial recurring usage record has been invoiced, delete the associated invoice and then you can delete the usage record as needed.

If the recurring usage record was created by the system on invoice, delete the associated invoice. Deleting the invoice automatically removes the recurring usage records created by the system.

The same rules that govern deleting Order Entry invoices apply to contract invoices (for example, you can't delete an invoice if a payment has been applied to it).

Turn recurring usage on or off

If you want to start recurring usage for a contract line, see Set up recurring usage for details. While you can start recurring usage on an in progress contract line, be aware that any existing usage records for the contract line will be considered recurring usage and billing results may not be as expected.

If you stop recurring usage, the next time you generate an invoice for the contract line, the system will not create a recurring usage record. You can continue to add usage records to the contract line for which you can generate billing. Alternatively, you can cancel the contract line.

If you start recurring usage after it was stopped, the next time you generate an invoice for the contract line the system will include billing for all recurring quantities that were skipped while recurring usage was not active. It will also consider any usage records added during the stopped period to be recurring usage as well.

To turn recurring usage on or off for a contract line:

1. Open the contract line in Edit mode.
2. In the Billing section, do one of the following:
   • To turn on recurring usage, select the Usage quantity recurs checkbox.
   • To turn off recurring usage, clear the Usage quantity recurs checkbox.
3. Save the contract line.