How to enable Proration in Subcription?

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What is Proration?

Proration in Zoho Billing ensures that your customers are charged only for the time they’ve used a subscription plan whether they upgrade, downgrade, or change their plan mid-cycle. It helps you provide transparent, fair, and trustworthy billing.

Why Use Prorated Billing?

Fair Charges: Customers pay only for what they’ve used.
Flexible Plans: Customers can change plans anytime.
Revenue Protection: Prevent revenue loss when offering upgrades, add-ons, or tiered pricing.

Real-Life Scenarios

Scenario 1: Mid-cycle Upgrade

Customer: Aaron Brown
Upgrade: Basic Plan → Professional Plan

Plan Type	Price/Month	Days Used	Calculation
Basic Plan	$300	10 Days	Credit = $300 – (300/30×10) = $200
Professional Plan	$500	20 Days	Charge = (500/30×20) = $333.33

Invoice on April 15:

Total Charge = $333.33
Credit Note = $200
Amount Payable = $133.33
Next Billing = May 5

Scenario 2: Mid-cycle Downgrade

Customer: Aaron Brown
Downgrade: Standard Plan → Starter Plan

Plan Type	Price/Month	Days Used	Calculation
Standard Plan	$300	15 Days	Credit = $300 – (300/30×15) = $150
Starter Plan	$100	15 Days	Charge = (100/30×15) = $50

Invoice on April 20:

Total Charge = $50
Credit Note = $150
- Applied: $50
- Remaining Credit: $100
Next Billing = May 5

How to Enable or Disable Proration

Navigate to Settings > Subscriptions > General
Toggle Prorated Billing ON or OFF
Choose your preferences
Click Save

Optional Setting:

Option	Description
Apply flat discount coupons proportionally on invoices with proration	Ensures that fixed discount coupons are prorated too, so they don’t nullify charges on short usage

Example:

Aaron subscribes on the 15th with a $100/month plan and a $50 flat discount
Prorated invoice = $50
Discount is also prorated to $25
Final bill = $25

Enable or Disable Proration During Subscription Creation

You can choose to apply proration individually for each subscription.

Steps:

Go to Sales > Subscriptions
Click + New
Fill in subscription details
Click Other Preferences
Enable or disable Generate invoices and credit notes based on prorated usage

What Happens Behind the Scenes?

Upgrades generate an invoice for the prorated difference
Downgrades generate a credit note (which can be applied to future invoices or refunded)

Summary Table

Action	Result
Upgrade Plan	Invoice created with prorated charge
Downgrade Plan	Credit note created for unused days
New Subscription	Option to apply proration manually

Key Difference:

Ordered Quantities: Includes all items from the PO in the bill—even if they haven’t arrived.
Received Quantities: Only bills what’s received. If you try to bill before delivery, Odoo will show an error.

Set a Custom Bill Control Policy per Product

Need different settings for certain products? You can override the global policy:

Go to Purchase app → Products → Products
Open the desired product
Under the Purchase tab → Vendor Bills section
Select the preferred Control Policy
Save your changes

This flexibility is useful when some products require prepayment, while others are billed upon delivery.

Enable 3-Way Matching for Safer Payments

3-Way Matching ensures vendors are paid only after receiving the products. It compares:

Purchase Order (PO)
Vendor Bill
Receipt

To activate:

Go to Purchase app → Configuration → Settings
Under Invoicing, enable 3-way matching
Click Save

Note: 3-way matching only works with Received Quantities.

Create Vendor Bills with 3-Way Matching

Go to Purchase app → Orders → Purchase Orders
Open a PO that hasn’t been billed yet
Click Create Bill

Now you’ll see a draft Vendor Bill. Under the Other Info tab, find the Should Be Paid field:

Yes – Items are received; bill can be processed
No – No items received yet
Exception – Something changed in the bill (e.g., quantity or price edited)

To process the bill:

Enter a Bill Date
Click Confirm
Click Register Payment → then Create Payment

Once payment is made, the Should Be Paid field updates to No, indicating the bill has been settled.

Track Billing Status on Purchase Orders

You can easily check a PO’s billing status:

Go to Purchase app → Orders → Purchase Orders
Select a PO → Click Other Information tab
Look for the Billing Status field

Billing Status Guide:

Billing Status	Ordered Quantities	Received Quantities
Nothing to Bill	PO confirmed	PO confirmed; nothing received
Waiting Bills	PO confirmed	Items received; bill not yet created
Fully Billed	Draft bill created	Bill created for all/received products

Tips

Use Received Quantities + 3-Way Matching for greater control and fewer billing errors.
The Should Be Paid status updates automatically but can be changed manually if needed.
Customize per product to fit different supplier requirements.
Avoid billing before receiving goods to prevent payment issues.

How to enable Proration in Subcription?

What is Proration?