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Cancel subscriptions with refund and write-off

This topic explains how to manage subscription cancellations effectively, ensuring accurate billing and customer satisfaction.

Handling cancellations in a subscription business requires a solid understanding of subscription billing and its recurring nature. Unlike in a product-based business, in a subscription business, you are not just canceling a single invoice, but changing an entire revenue stream. Problems can arise if you operate in this environment without a well thought-out policy and disciplined execution. You might displease customers by issuing erroneous invoices; customers might continue to have access to canceled services; or you might record unintended credits to customers.

Handling Subscription Cancellations

Your cancellation policy need to handle the following two use cases:

  • Customer-initiated cancellation that occurs when a customer chooses to discontinue service.

  • Company-initiated cancellation that occurs when you choose to revoke customer's access. For example, if a customer fails to pay an invoice, you can choose to cancel the subscription of the customer.

For each of the above use cases, define a process that addresses the following areas when canceling a subscription:

  • Invoicing

  • Revenue Accounting