In this article, you will learn how to adjust the pro-rata calculation for contracts with the billing type "fixed due date" that are signed at the end of the month. This applies particularly to contracts with a due date on the 29th, 30th, or 31st of a month. You will also learn how idle periods affect the due date in these cases and what validation rules apply.
Topics in this article:
- Enable fixed due date billing for month-end
- Notification when creating a contract at the end of the month
- Idle periods apply only in full mode
- Impact on the contract's due date
Fast lane:
- Navigate to Settings / Contracts / Rates and open the desired rate.
- Ensure that the option Allow fixed due date billing at the end of the month is enabled.
- When creating a contract at the end of a month, a notification about the fixed due date appears.
- Idle periods for such contracts are applied exclusively in full pro-rata calculation mode.
- Once an idle period is added, the contract's due date is adjusted accordingly.
Enable fixed due date billing for month-end
In the rate configuration, you can activate the option to adjust the payment method to the follow-up term. This setting ensures that for contracts starting on the 29th, 30th, or 31st of a month, the due date is dynamically adjusted.
How to enable this option:
- Open an existing rate or create a new one under Settings / Contracts / Rates.
- Go to Edit Payment Method / Advanced Settings.
- Ensure that the billing type Fixed due date (absolute) is selected.
Notification when creating a contract at the end of the month
When a new contract with a start date on the 29th, 30th, or 31st of a month is created, the following message appears in the Magicline backend:
"The contract is created with a fixed due date at the end of the month (29th, 30th, 31st). Idle periods for this contract will be applied in full mode and will shift the due date."
This information serves as a reminder that idle periods will automatically change the contract’s due date.
Idle periods apply only in full mode
For contracts with a payment start at the end of the month, idle periods can only be applied in full pro-rata calculation mode.
This means:
- Partial calculation of idle periods is not possible.
- Idle periods will shift the contract’s due date accordingly.
This is automatically enforced when configuring an idle period. If a different mode is selected, a validation check will display a corresponding notification.
Impact on the contract's due date
Once an idle period is applied, the contract’s regular due date is postponed by the duration of the idle period. This means:
- A contract with a due date at the end of the month will remain tied to the end of the month.
- If an idle period of, for example, one month is applied, the next due date will be postponed by one month.
- This happens automatically, requiring no manual adjustments.
With these adjustments, contracts signed at the end of the month are correctly calculated, ensuring that idle periods are applied without unexpected effects. 🚀