Before setting up Balances for your end-customer Accounts, we strongly recommend that you review this topic, which explains in details how charges are drawn-down against Balance amounts for billing purposes:
Secondly, if you intend to use both Prepayments and Balances on your end-customer Accounts, please review this section on how to control the draw-down order against them for billing:
Understanding Charges Draw-Down Against Balances for Billing
When you create Balances for an end customer Account, it’s important to know how the Balance amounts are handled for billing purposes:
Draw-Down Charge Types
A Balance amount on an Account can be applied to Bills that contain any of the following charge types and made available for draw-down:
- Usage
- Standing Charge
- Minimum Spend
- Recurring Charges:
- Counter running total charge
- Counter adjustment debit
Notes:
- Controlling the charge types for draw-down? When you create or edit a Balance, you can select the charge types you want to be made available for draw-down against the Balance. If you select none, then by default all are made available for draw-down against the Balance.
- Balance and Prepayments on an Account? If you have both Balances and Prepayments added to an end-customer Account, then you can specify the order in which charges are drawn-down against them. See the following section for details.
Balance Active Period
For billing purposes, usage, standing charges, minimum spend, or recurring charges on an Account with a Balance can only be drawn-down against the Balance amount for the period the Balance is active for the Account.
- Importantly, note that if you create a Balance on an Account and the Balance is active for only part of the normal billing period set up for the Account, then only the charges for usage, standing charge, minimum spend or recurring charges that are due for the period the Balance is active will be drawn down against the Balance, not charges due for the entire normal billing period for the Account
- You can also optionally define a rollover or grace period, with a restricted rollover amount specified, to allow any unused Balance amounts to continue to be drawn-down against for billing purposes beyond the defined active period for the Balance. See the following section for details.
Balance Consumption
When applied to a Bills, the Balance amount will be drawn down until it is fully consumed:
- First and subsequent Bills. If the Balance amount is greater than the first Bill amount and the Balance remains active for some or all of the following billing periods, the remaining Balance amount will be applied to subsequent bills.
- Draw-down applied to Bill line items is proportional to usage. If an Account Bill contains several line items each of which is eligible to draw-down against a Balance on the Account, then the Balance amount is allocated proportionally against each line item:
- For example, if the Account Balance amount is $20 and the Bill contains three line items in the amount of $30, $35, and $35 for a total Bill of $100, the entire Balance amount of $20 is not simply used for draw-down against the first line item. The $20 is distributed proportionally for draw-down across all three line items: the first line item gets 30% of $20, the second gets 35% of $20, and the third gets 35% of $20.
- This method of draw-down in also applied if the Account has multiple Balances available for draw-down at billing. However, the rule that the Balance that expires first will be applied first - see below Multiple Balances on Account.
- Linking Balances to Contracts. Linking a Balance to a Contract on an Account is optional. However, if you have linked an Account Plan to a Contract or set up an ad-hoc Charge for the Account and linked the Charge to a Contract and you want to ensure the Balance is available for draw-down against billed charges on the Account - either usage or ad-hoc charges - you must either link the Balance to the same Contract or ensure the Balance is not linked to a Contract. See Linking Balances to Contracts for more details.
Balance Transactions Ledger
Each Transaction that makes up the Balance, for example, an addition of credit, consumption of credit against a Bill, or adjustment of credit, are all recorded against a ledger, so that a complete record of all Transaction movements is known.
The Balance transactions panel on a Balance details page acts as a ledger. For example, if a Bill draws-down against a Balance for charges due on the Account during the Balance active period, then this will automatically show as a Bill Transaction with a link out to view the Bill. See Working with the Balance Transactions Ledger for more details.
Multiple Balances on Account
You can set up multiple Balances for a single Account. If you do this, there are some key points to note:
- Draw-down order. If you have created more than one Balance for an Account, the order in which Balances are drawn-down against is determined by Balance end date - the Balance with the earlier end date is draw-down against first.
- Importantly, please note that if you’ve set up multiple Balances on an Account and a Balance has a Rollover end date defined, then this date will be used instead of the Balance end date for the purpose of determining the draw-down order.
- Balances that have exactly the same end date don’t share draw-down proportionally (and this includes cases where for one Balance it is the Balance end date and for another it is the rollover end date). They are drawn-down against in the order they happen to come back from data storage, which is deterministic in the sense that it won’t change if the Balances are not changed. However, the order is not predictable, in that you can’t tell by looking at the Balances which one would be draw-down against first.
- If you have multiple Balances ending on the same date and want to enforce a particular draw-down order, please contact m3ter Support so we can guide you toward the best solution based on your current configuration.
- If your pricing use case requires multiple overlapping Balances on Accounts, please contact m3ter Support so we can guide you toward the best solution to meet your requirements.
- Overage surcharge percentage must be configured for last Balance drawn-down. As stated above, if you have multiple Balances on an end-customer Account, the draw-down order is determined by the end date on the different Balances - the Balance with earliest expiry date is drawn-down against first. However, if an overage surcharge is not configured for the last Balance that will be drawn-down against for overages, then no overage surcharge that might be configured on Balances drawn-down previously will be applied.
Important: Frequently Recalculating Bills for Accounts with Multiple Balances! If you have end-customer Accounts with multiple Balances ending on the same date and your accounting operations require Bills for those Accounts to be frequently recalculated during the service period of the Balances, then, as stated above, the draw-down order can change between successive Bills.
New Unified Balance Drawdown
A new and enhanced Balance drawdown model called “Unified Drawdowns” is now available. It’s currently opt-in via an Organization Setting, and over time will become the default. This unified draw-down model is designed to maximize credit use, but also opens up the opportunity to implement many other optimizations and capabilities. When enabled, the billing engine considers all eligible Balances together rather than one at a time and uses a max-flow algorithm with iterative optimizations to achieve the best coverage for draw-down against the available Account credit.
There are some key points to note when enabling this unified Balance draw-down mode:
- Where proportional distribution of credit is necessary, the system will use best-efforts to proportionally distribute Balance credit draw-down across line items.
- This is a necessary side-effect of maximizing coverage and one of the main reasons small amounts of credit could be left unused. The system still uses best-effort to distribute line items draw-down across multiple Balances proportionally, but will sacrifice it in favor of coverage if necessary.
- When drawing-down against Balances within Parent/Child Account hierarchies, the system no longer prioritizes Parent Account credit use.
- As far as possible, the system distributes proportionally between all consumers of the credit - that is, the system doesn’t prioritize either Parent or Child usage.
Other enhancements this model unlocks are:
- Surcharge items are added per line item that is in overage (similar to overage pricing).
- Previously the system would group surcharge by Commitment and add a single overage line item.
- Overage pricing, when defined, is used even when there is no Balance or Commitment.
- This a change in logic that’s been requested and outstanding for some time - overage pricing should be used whenever the usage isn’t being covered by a Balance, regardless of whether one exists or if it existed and was exhausted during that billing cycle.
- Child Accounts will now draw-down from both Child and Parent Balances and Commitments.
Important:
- Preview Release. Please note the Unified Balance Drawdown feature is currently in Preview release. See Feature Release Stages for Preview feature guidance.
- Test in non-production first! If you intend to enable Unified Balance Drawdown, we strongly recommend that you test Balance draw-down behavior thoroughly in a non-production (Sandbox) Organization before switching to your production Organization, and especially if you’re using a complex balance/credit model.
Balances in Parent/Child Account Hierarchy
If you intend to create Balances on Accounts that belong to a Parent/Child Account hierarchy, then the availability of Balance amounts for draw-down against charges at billing will depend on a combination of factors:
- Whether the Balance is on the Parent or the Child Account.
- Which billing mode you have selected when attaching Plans to Parent or Child Accounts.
It’s important to consider this when setting up your Parent/Child Accounts for billing and you expect to also create Balances for either Parent or Child Accounts. For example, suppose:
- The Parent Account:
- Has a Balance with available credit amount.
- Does not have an attached Plan.
- The Child Account:
- Does not have a Balance.
- Does have an attached Plan where the Account billing hierarchy mode is set to the default option: Bill parent account - bill line item per account.
With this set up, if in a given billing period usage data is ingested for the Child Account’s product consumption, then the Balance amount on the Parent Account is made available to draw-down against Child Account charges on the Parent bill:
However, if the Account billing hierarchy mode on the attached Plan of the Child Account is updated and set to: Bill child account, then the Parent Account Balance will not be made available to draw-down against the Child Account charges at billing for the separate Child Account Bill that is now generated:
For another example scenario that changes the original set up to locate the Balance on the Child Account instead of on the Parent Account:
- The Parent Account:
- Does not have a Balance.
- Does not have an attached Plan.
- The Child Account:
- Has a Balance with available credit amount.
- Does have an attached Plan where the Account billing hierarchy mode is set to the default option: Bill parent account - bill line item per account.
With this alternative set up, if in a given billing period usage data is ingested for the Child Account’s product consumption, then the Balance amount on the Child Account is not made available to draw-down against Child Account charges on the Parent bill:
However, if the Account billing hierarchy mode on the attached Plan of the Child Account is updated and set to: Bill child account, then the Child Account Balance will be made available to draw-down against the Child Account charges at billing for the separate Child Account Bill that is now generated:
Test Parent/Child Account billing setup! If you intend to use Parent/Child Account hierarchies and want to use Balances on either Parent or Child Accounts, then we strongly recommend that you test the overall billing setup in your sandbox/pre-production environment before implementing in production. See also: Billing Hierarchy Modes for Parent/Child Accounts. Period for Charges Draw-Down
The following diagrams illustrate how the effective period for charges draw-down against Balance amounts on an Account are determined for billing purposes:
- Active Balance Period by Date. No rollover or grace periods for consuming the Balance amount defined:
- Active Balance Period by Date with Grace Periods. Rollover periods defined for consuming the Balance amount:
- Active Balance Period by Date/Time. No rollover or grace periods defined for consuming the Balance amount:
Note that the end date/time is exclusive to the second, meaning that in this example the Balance amount can be used for draw-down against charges due up to and including 11:59:59 on 30th June.
Balances Draw-Down Order Against Prepayments
If you have added Balances and Prepayments as credits on an Account, you can define the order in which these credit amounts are drawn-down for billing the Account. Four options are available for this credit application order for Balances against Prepayments:
- Prepayment then balance. Draw-down against Prepayment credit before Balance credit. Default.
- Balance then prepayment. Draw-down against Balance credit before Prepayment credit.
- Prepayment only. Only draw-down against Prepayment credit.
- Balance only. Only draw-down against Balance credit.
You can configure this in two places:
- At Organization level as part of your Organization configuration. See Viewing and Editing Organization Configuration.
- At individual Account level when creating or editing the Account to which the Prepayments and Balances have been added under Bill settings. See Creating an Account.
- If you configure this at Account level, the Account level setting takes precedence over any setting at Organizational level.
Important! If the Account belongs to a Parent/Child Account hierarchy, then the Credit application order settings are not available, and the draw-down order defaults always to Prepayment then Balance order.
Test Parent/Child Account billing setup! If you intend to use Parent/Child Account hierarchies and want to use Balances on either Parent or Child Accounts, then we strongly recommend that you test the overall billing setup in your sandbox/pre-production environment before implementing in production. See also: Billing Hierarchy Modes for Parent/Child Accounts. Period for Charges Draw-Down
The following diagrams illustrate how the effective period for charges draw-down against Balance amounts on an Account are determined for billing purposes:
- Active Balance Period by Date. No rollover or grace periods for consuming the Balance amount defined:
- Active Balance Period by Date with Grace Periods. Rollover periods defined for consuming the Balance amount:
- Active Balance Period by Date/Time. No rollover or grace periods defined for consuming the Balance amount:
