Pre-requisites

• New Catalog is enabled.

• Either Orders or Orders Harmonization must be enabled.

How Calculated Charges are billed

Zuora follows these principles when generating invoice items for calculated charges:

Standalone invoice item:

Each calculated charge appears as a separate invoice line item. The amount is determined by the configured percentage, the total amount of eligible charges in the billing period, and any defined minimum or maximum limits.

Evaluation at billing time:

Eligibility filters are evaluated at the time of billing. Any new subscriptions or amendments created before billing that meet the filter criteria are included in the calculation.

​Proration Rules:

When calculated charge and eligible charges are not fully aligned during a billing period, eligible charges’ contribution and calculated charge’s minimum/maximum amounts are prorated based on the overlapping service period.

Dependency on eligible charges:

A calculated charge is billed only after all eligible charges for the billing period are fully billed. For usage charges, billing must be completed even if there is no usage recorded.

Net amount after discounts:

The calculated charge is based on the net amount of eligible charges after discounts are applied.

Pre-tax and tax-inclusive handling:

By default, calculations use the pre-tax amount of eligible charges. For tax-inclusive charges, the tax-inclusive amount is used.

Discounts do not apply:

Percentage and fixed-amount discounts do not apply to calculated charge invoice items.

Pending charges are excluded:

Pending charges that meet eligibility criteria are skipped during billing. Once activated, they are not retroactively included in previously billed periods.

Order Line Items excluded:

Order Line Items (OLIs) do not contribute to calculated charges.

Ineligible charges:

The following charges are excluded, even if they meet filter conditions:

• Other calculated charges
• Charges with a different currency than the calculated charge
• Charges from subscriptions in Draft or Expired status
• Charges with a different invoice owner
• Charges with non-standard charge functions: prepayment, drawdown, credit commitment, and commitment true up.
• Charges that are actively attached to a Billing Schedule.

No retroactive adjustments:

Changes to eligible charges after a calculated charge has been billed do not trigger for the calculated charge. For example: Late usage records do not contribute retroactively.

Ownership and eligibility:

Eligibility is determined based on the invoice owner at the time the invoice item is created. Subsequent ownership changes do not affect previously billed calculated charges.

Best practices

• Configure calculated charges to bill In Arrears when they depend on usage charges
• Make sure the calculated charge's billing period is the same as, or longer than, the billing periods of its eligible charges. For example, if a calculated charge is billed monthly and one of its eligible charges is billed quarterly, the calculated charge will not be invoiced in the first two months of the quarter.
• Include both calculated charges and their eligible charges in the same bill run whenever possible. If not, ensure bill runs are executed in the correct sequence.
• When running a Billing Preview, include all relevant accounts to ensure accurate results.
• Plan subscription owner transfers carefully. If ownership changes should affect eligibility, perform the transfer before the eligible charges are billed.