How to Prorate Invoices

Save

In the case of a service invoice, such as for a subscription or Web-based service, you may have to prorate the charges if you or the customer decided to change or end the arrangement early during the billing period. Prorating is simply calculating the service charge by day to determine the total fee for that billing period. It is a partial charge for services. This is a simple calculation that you can probably perform by hand.

  • Determine the total service fee for the period and the number of days in that period. For instance, monthly billing is usually the standard used when you send invoices for a service. So if you bill $200 monthly, start by taking the number of days in that particular month. Use 30 days in the month of June, for an example.

  • Divide the total fee for the period by the number of days in the month. In this example the result is $200 divided by 30, or $6.67 per day.

  • Determine how many days in that period the customer didn’t use the service. Say, for example, the customer canceled the service after 16 days of use in the previous month -- that means he requires a service credit for 14 days.

  • Multiply the number of days the customer did not use the service by the per-day prorated rate. In this example, that is 14 days times $6.67, or $93.38.

  • Add a line to the service invoice crediting this fee to the customer (for instance, "-93.38"). Deduct it from the full charge for the month, which is $200, to determine the final invoice balance for the previous month, of $106.62.

  • Notate the invoice with a description of the deduction to clarify the purpose of the credit. For instance, "Prorated credit for 14 days -- June 17-30."

References

  • Photo Credit Gerry Boughan/Hemera/Getty Images
Promoted By Zergnet

Comments

Related Searches

Check It Out

Are You Really Getting A Deal From Discount Stores?

M
Is DIY in your DNA? Become part of our maker community.
Submit Your Work!