Credit memo reversal in Billing - Revenue integration
This document explains the process and limitations of credit memo reversal in Zuora Billing and its integration with Zuora Revenue, including the generation of debit memo transactions and their impact on revenue recognition.
If you have the Reverse Credit Memo user permission in Zuora Billing, you can reverse posted credit memos. When credit memo reversal happens in Zuora Billing, a debit memo transaction is generated by Zuora Billing. After this debit memo transaction is synced to Zuora Revenue, it will be treated as a new type of debit memo source called AdhocFromCreditMemo.
Limitations
Zuora Revenue currently supports the common use cases of credit memo reversal in Zuora Billing with the following limitations:
-
After the debit memo is generated for credit memo reversal, any deletion, unposting, or cancellation of the debit memo cannot be consumed in Zuora Revenue. It means the reversal entry will not be created in Zuora Revenue.
-
The debit memo transaction does not have any reference back to the reversed credit memo. Instead, it references back to the original sales order (SO) line for the charge. The SO reference for both regular and discount charges consists of the original ID of the rate plan charge (RatePlanCharge.OriginalId) followed by the rate plan charge segment (RatePlanCharge.segment).
-
The new Zuora Billing standard field CreditMemo.Reversed cannot be consumed in Zuora Revenue.
Use cases
Case 1
In this use case, the following actions occur in sequence in Zuora Billing.
- On the first day, a termed subscription is created with a recurring charge (C-00196777) of $100 from 09/01/2021 till 09/31/2021. A sales order (SO) transaction will be consumed in Zuora Revenue.
- On the same day, a bill run is created as of 10/01/2021. This will get an invoice transaction being consumed in Zuora Revenue.
- On the second day, the subscription is canceled with the effective date of 09/16/2021. The original SO line is updated with the new term.
- On the same day, a bill run is created to auto-generate a credit memo for the duration from 09/16/2021 till 09/30/2021. A CM-C transaction will be consumed in Zuora Revenue.
- On the third day, a credit memo reversal occurs to the generated credit memo. The system auto-generates a debit memo for the duration from 09/16/2021 till 09/30/2021. The debit memo transaction will be consumed as an invoice line in Zuora Revenue with reference to the rate plan charge ID and rate plan charge segment of the original SO line.
After billing data is synced, these actions will get the following transaction lines being consumed in Zuora Revenue.
| Action | Subscription # | Subscription Version | Charge # | Charge Original Id | Charge Segment | Transaction Type | SO Line Id | Start Date | End Date | SO Amount | Invoice # | INV Line Id | Invoice Amount |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Create subscription | A-S00099756 | 1 | C-00196777 | abc123 | 1 | SO | abc123.1 | 9/1/21 | 9/30/21 | 100 | |||
| Bill run | A-S00099756 | 1 | C-00196777 | abc123 | 1 | INV | abc123.1 | 9/1/21 | 9/30/21 | INV00016050 | 112233 | 100 | |
| Cancel subscription | A-S00099756 | 2 | C-00196777 | abc123 | 1 | SO | abc123.1 | 9/1/21 | 9/15/21 | 50 | |||
| Bill run | A-S00099756 | 2 | C-00196777 | abc123 | 1 | CM-C | abc123.1 | 9/16/21 | 9/30/21 | CM00000602 | 223123 | -50 | |
| Credit memo reversal | A-S00099756 | 2 | C-00196777 | abc123 | 1 | INV | abc123.1 | 9/16/21 | 9/30/21 | DM00000019 | 345345 | 50 |
Case 2
In this use case, the following actions occur in sequence in Zuora Billing. Different from the first use case, a discount charge is created together with the regular charge. This results in two SO lines being consumed in Zuora Revenue. The subsequent bill runs, subscription cancelation, and credit memo reversal will have an impact on both SO lines.
- On the first day, a termed subscription is created with a recurring charge (C-00196780) of $100 and a discount percentage charge (C-00196781) of 10% from 09/01/2021 till 09/31/2021. These two charges will be consumed as two SO lines in Zuora Revenue.
- On the same day, a bill run is created as of 10/01/2021. Two invoice lines are consumed in Zuora Revenue for the original two SO lines.
- On the second day, the subscription is canceled with the effective date of 09/16/2021. The original two SO lines are updated for the new term in Zuora Revenue.
- On the same day, a bill run is created to auto-generate a credit memo for the duration from 09/16/2021 till 09/30/2021. Two CM-C lines are consumed in Zuora Revenue with reference to the original SO lines.
- On the third day, a credit memo reversal occurs to the generated credit memo. The system auto-generates a debit memo for the duration from 09/16/2021 till 09/30/2021. Two debit memo lines are consumed in Zuora Revenue with reference to the rate plan charge ID and rate plan charge segment of the original SO line.
After billing data is synced, these actions will get the following transaction lines being consumed in Zuora Revenue.
| Action | Subscription # | Subscription Version | Charge # | Charge Original Id | Charge Segment | Transaction Type | SO Line Id | Start Date | End Date | SO Amount | Invoice # | INV Line Id | Invoice Amount |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Create subscription | A-S00099758 | 1 | C-00196780 | abc1234 | 1 | SO | abc1234.1 | 9/1/21 | 9/30/21 | 100 | |||
| Create subscription | A-S00099758 | 1 | C-00196781 | abc1235 | 1 | SO | abc1234.1.abc1235.1 | 9/1/21 | 9/30/21 | -10 | |||
| Bill run | A-S00099758 | 1 | C-00196780 | abc1234 | 1 | INV | abc1234.1 | 9/1/21 | 9/30/21 | INV00016051 | 3213 | 100 | |
| Bill run | A-S00099758 | 1 | C-00196781 | abc1235 | 1 | INV | abc1234.1.abc1235.1 | 9/1/21 | 9/30/21 | INV00016051 | 3214 | -10 | |
| Cancel subscription | A-S00099758 | 2 | C-00196780 | abc1234 | 1 | SO | abc1234.1 | 9/1/21 | 9/15/21 | 50 | |||
| Cancel subscription | A-S00099758 | 2 | C-00196781 | abc1235 | 1 | SO | abc1234.1.abc1235.1 | 9/1/21 | 9/15/21 | -5 | |||
| Bill run | A-S00099758 | 2 | C-00196780 | abc1234 | 1 | CM-C | abc1234.1 | 9/16/21 | 9/30/21 | CM00000603 | 223124 | -50 | |
| Bill run | A-S00099758 | 2 | C-00196781 | abc1235 | 1 | CM-C | abc1234.1.abc1235.1 | 9/16/21 | 9/30/21 | CM00000603 | 223125 | 5 | |
| Credit memo reversal | A-S00099758 | 2 | C-00196780 | abc1234 | 1 | INV | abc1234.1 | 9/16/21 | 9/30/21 | DM00000020 | 32341 | 50 | |
| Credit memo reversal | A-S00099758 | 2 | C-00196781 | abc1235 | 1 | INV | abc1235.1 | 9/16/21 | 9/30/21 | DM00000020 | 32342 | -5 |