Proration Policies for Cancellations

INFO-Subscription supports configurable proration policies for subscription cancellations through the Dunning Process configuration. These policies determine how subscribers are charged or credited when a subscription is cancelled during an active billing period.

This document explains the proration policy options, their effects, and provides examples with calculations and visual timelines.

Note

Proration policies are configured via the CancellationProration property in the Dunning Process, which references a ProrationPolicy entity. See the ProrationPolicy API documentation for technical details.

Understanding Cancellation Proration

When a subscription is cancelled before its natural end date (and after the subscription has already started), two distinct billing scenarios may apply, depending on the timing of the cancellation:

1. Cancellation in a Paid/Settled Period – The subscriber has already paid for the current subscription period.

2. Cancellation in an Invoiced Period – The subscriber has been billed/invoiced for the period but has not yet paid anything.

The proration policy you configure determines what happens in each scenario.

Note

Proration policies only apply to subscriptions that have already started. Cancellations made before the subscription start date are never prorated.

Types of Proration Policies

Each policy can be configured independently for the two cancellation scenarios mentioned above.

The primary options are:

• Proration with financial adjustment (default) – Credit or charge the subscriber based on the exact time remaining in the period.

  • API values: GenerateAllowanceForRemainingTime (for paid periods) and GenerateChargeForConsumedTime (for invoiced but not paid periods)

• No Proration – No financial adjustment is made; the subscription ends at the cancellation time and no credits for unused time or adjustments to invoiced amounts are issued.

  • API value: NoProration

Note

The default behavior is to apply proration with financial adjustment (GenerateAllowanceForRemainingTime for paid periods and GenerateChargeForConsumedTime for invoiced periods). This means subscribers are credited for unused time or charged only for the time they will use. Subscribers lose access from the cancellation time regardless of which proration policy is chosen.

Scenario 1: Cancellation in a Paid/Settled Period

In this scenario, the subscriber has already paid for the current subscription period, and the cancellation occurs before the period ends.

Policy Options:

Policy	Effect
Proration (API: GenerateAllowanceForRemainingTime)	The subscriber is credited for the unused portion of the period. An allowance is issued for the prorated amount.
No Proration (API: NoProration)	No refund or credit is issued. The subscription is cancelled. The subscription period is effectively shortened without financial compensation.

Visual Timeline: Proration with Financial Adjustment (Paid Period)

        gantt
    title Cancellation with Proration (GenerateAllowanceForRemainingTime)
    dateFormat  YYYY-MM-DD
    section Subscription Period
        Paid Period (Jan 1 - Jan 31)   :done, period, 2025-01-01, 30d
        Cancellation Date   :milestone, cancel, 2025-01-15, 0d
        Unused Period (Credited)   :crit, unused, 2025-01-15, 16d
    section Billing Events
        Invoice Paid (Jan 1)   :milestone, paid, 2025-01-01, 0d
        Allowance Issued   :milestone, credit, 2025-01-15, 0d
    

In this example:

• Subscription Period: January 1 - January 31 (30 days, already paid)

• Cancellation Date: January 15 (after 14 days of service)

• Unused Period: 16 days (from January 15 to January 31)

• Credit Issued: The subscriber receives a credit for 16/30 of the paid amount

Calculation Example:

Assume the subscriber paid €90.00 for the 30-day period.

Paid Amount: €90.00
Period Length: 30 days
Days Used: 14 days (Jan 1 - Jan 14)
Days Unused: 16 days (Jan 15 - Jan 31)

Proration Calculation:
Credit Amount = (Days Unused / Period Length) × Paid Amount
Credit Amount = (16 / 30) × €90.00
Credit Amount = €48.00

The subscriber receives a €48.00 allowance for the unused portion of the period. That allowance is carried on the billing account and can be applied in a later settlement; see Billing Account Role.

Visual Timeline: No Proration (Paid Period)

        gantt
    title Cancellation with No Proration (Paid Period)
    dateFormat  YYYY-MM-DD
    section Subscription Period
        Access Period (Jan 1 - Jan 14)   :done, period, 2025-01-01, 14d
        Cancellation Date   :milestone, cancel, 2025-01-15, 0d
        No Access (Not Compensated)   :crit, noaccess, 2025-01-15, 16d
    section Billing Events
        Invoice Paid (Jan 1)   :milestone, paid, 2025-01-01, 0d
        No Credit Issued   :milestone, nocredit, 2025-01-15, 0d
    

In this example:

• Subscription Period: January 1 - January 31 (30 days, already paid)

• Cancellation Date: January 15 (cancellation registered)

• Access: The subscriber loses access from January 15

• Credit: No credit is issued; the subscription period is shortened without financial compensation

Financial Impact:

Paid Amount: €90.00
Credit Issued: €0.00
Access Period: 14 days (Jan 1 - Jan 14)

The subscription is cancelled on January 15, and the subscriber loses access immediately without receiving a refund for the unused 16 days. No new billing period is created.

Scenario 2: Cancellation in an Invoiced Unpaid Period

In this scenario, the subscriber has been invoiced for the upcoming subscription period, but the invoice has not been paid yet.

Policy Options:

Policy	Effect
Proration (API: GenerateChargeForConsumedTime)	The invoice amount is adjusted (prorated) to reflect only the portion of the period that will be used before cancellation.
No Proration (API: NoProration)	The full invoice amount remains due. The subscriber is expected to pay for the entire period, even though the subscription will be cancelled.

Visual Timeline: Proration with Financial Adjustment (Invoiced Period)

        gantt
    title Cancellation with Proration (GenerateChargeForConsumedTime)
    dateFormat  YYYY-MM-DD
    section Subscription Period
        Future Period (Feb 1 - Feb 28)   :active, period, 2025-02-01, 28d
        Cancellation Date   :milestone, cancel, 2025-02-10, 0d
        Period Used   :done, used, 2025-02-01, 9d
        Period Discarded   :crit, discarded, 2025-02-10, 18d
    section Billing Events
        Invoice Issued (Jan 15)   :milestone, issued, 2025-01-15, 0d
        Invoice Adjusted   :milestone, adjusted, 2025-01-25, 0d
        Invoice Due (Feb 1)   :milestone, due, 2025-02-01, 0d
    

In this example:

• Subscription Period: February 1 - February 28 (28 days)

• Invoice Issued: January 15 (for the upcoming period)

• Cancellation Date: January 25 (before period starts, after invoice issued)

• Planned Service Period: February 1 - February 10 (9 days only)

• Invoice Adjustment: The invoice is reduced to charge only for 9 days

Calculation Example:

Assume the invoice amount is €84.00 for the 28-day period.

Original Invoice Amount: €84.00
Period Length: 28 days
Days to Be Used: 9 days (Feb 1 - Feb 10)
Days Discarded: 19 days (Feb 11 - Feb 28)

Proration Calculation:
Adjusted Amount = (Days to Be Used / Period Length) × Invoice Amount
Adjusted Amount = (9 / 28) × €84.00
Adjusted Amount = €27.00

The invoice is adjusted to €27.00, reflecting only the 9 days of service the subscriber will receive.

Visual Timeline: No Proration (Invoiced Period)

        gantt
    title Cancellation with No Proration (Invoiced But Unpaid Period)
    dateFormat  YYYY-MM-DD
    section Subscription Period
        Future Period (Feb 1 - Feb 28)   :active, period, 2025-02-01, 28d
        Cancellation Date   :milestone, cancel, 2025-02-10, 0d
        Period Used   :done, used, 2025-02-01, 9d
        No Service After Cancellation   :crit, noservice, 2025-02-10, 18d
    section Billing Events
        Invoice Issued (Jan 15)   :milestone, issued, 2025-01-15, 0d
        No Adjustment   :milestone, noadjustment, 2025-01-25, 0d
        Full Amount Due (Feb 1)   :crit, due, 2025-02-01, 0d
    

In this example:

• Subscription Period: February 1 - February 28 (28 days, invoiced)

• Cancellation Date: January 25 (cancellation registered before period starts)

• Invoice: Remains at full amount (€84.00)

• Service: Subscriber receives service only until February 10

Financial Impact:

Original Invoice Amount: €84.00
Adjusted Amount: €84.00 (no adjustment)
Days of Service: 9 days (Feb 1 - Feb 10)
Subscriber Pays: Full €84.00 for partial service

The subscriber must pay the full invoice amount even though the subscription ends on February 10, receiving only 9 days of the 28-day period.

Configuring Proration Policies

Proration policies are configured at the Dunning Process level via the CancellationProration property. This property references a ProrationPolicy entity that defines how cancellations should be handled.

Steps to Configure

1. Create a ProrationPolicy using the API:

   POST https://api.info-subscription.com/ProrationPolicy HTTP/1.1
   Host: api.info-subscription.com
   S4-TenantId: {your-tenant-id}
   Authorization: Bearer {token}
   Content-Type: application/json
   
   {
     "name": "Standard Proration Policy",
     "paidProration": "GenerateAllowanceForRemainingTime",
     "notPaidProration": "GenerateChargeForConsumedTime"
   }
   

2. Associate the ProrationPolicy with a Dunning Process:

   When creating or updating a Dunning Process, set the cancellationProrationId to reference the ProrationPolicy you created.

   POST https://api.info-subscription.com/DunningProcess HTTP/1.1
   Host: api.info-subscription.com
   S4-TenantId: {your-tenant-id}
   Authorization: Bearer {token}
   Content-Type: application/json
   
   {
     "name": "Standard Dunning Process",
     "cancellationProrationId": "{proration-policy-id}",
     // ... other dunning process properties
   }
   

Policy Options Reference

Property	Description
paidProration	Defines how to handle cancellations when the period is already paid/settled. Options: GenerateAllowanceForRemainingTime (default, credits unused time), NoProration (no financial adjustment)
notPaidProration	Defines how to handle cancellations when the period is invoiced but not paid. Options: GenerateChargeForConsumedTime (default, charge only for time used), NoProration (charge full amount)

Business Considerations

When choosing a proration policy, consider the following:

Proration with Financial Adjustment (GenerateAllowanceForRemainingTime / GenerateChargeForConsumedTime):

• Pros: Fair to subscribers; they only pay for what they use. Can improve customer satisfaction and reduce churn.

• Cons: More complex accounting; requires issuing credits and adjusting invoices. May result in small credits that are difficult to process.

No Proration:

• Pros: Simpler accounting; no need to issue credits or adjust invoices. Clear policy for subscribers.

• Cons: May be perceived as unfair by subscribers who cancel mid-period. Could lead to negative customer feedback.

Hybrid Approach:

You can configure different policies for paid vs. invoiced periods. For example:

• Paid Period: NoProration (no credit issued, subscriber loses access immediately)

• Invoiced Period: GenerateChargeForConsumedTime (adjust invoice to reflect actual usage)

This approach balances simplicity (no credits for already-paid periods) with fairness (adjusted charges for future periods). Note that subscribers lose access from cancellation time regardless of the proration policy chosen.

By configuring these policies appropriately, you can balance customer satisfaction, operational simplicity, and revenue protection.

Important

Regardless of the proration policy chosen, subscribers will lose access to the service from the cancellation time. Proration policies only affect financial adjustments, not access duration.

Integration with Events

When a subscription is cancelled, the SubscriptionCancelled event is triggered. Developers integrating with INFO-Subscription should listen for this event to keep external systems in sync with subscription and billing changes.

For more details on events, see the Events and Webhooks section.

Related Documentation

• Billing Overview – Understand the overall billing cycle and how cancellations fit in

• Payment Matching, Settlement, and Billing Account Reconciliation – See how allowances and charges flow through later settlements

• Subscription Cancellation Event – Details on the cancellation event

• Dunning Process – How dunning processes work with billing

• ProrationPolicy API – API reference for creating and managing proration policies