Subscriptions cancellation 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 planned policy and disciplined execution. The customers will not be satisfied if you issue erroneous invoices. Customers might continue to have access to the canceled services or you might record unintended credits to customers.
Handling Subscription Cancellations
Your cancellation policy need to handle the following two use cases:
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Customer-initiated cancellation that occurs when a customer chooses to discontinue service.
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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:
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Invoicing
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Revenue Accounting