On the surface, subscription billing may appear straightforward: just bill the same amount each billing cycle. The reality is that the subscriber lifecycle can involve a number of complex billing scenarios such as upgrades, downgrades, adding or removing additional products, changing quantities, or any combination of these billing events—each of which may then require you to prorate the invoice to accurately reflect the change in terms or usage.

In addition to product or plan changes, an unsatisfied subscriber might need a refund or service credit, or you may decide to issue promotional credits or discounts to reward and retain your most loyal subscribers.

Subscription businesses must account for all of these changes accurately, both in terms of the invoice sent to the subscriber and in terms of the accounting team’s monthly process to close the books and produce financial reports. Managing complex billing scenarios at scale can quickly become a workflow and reporting challenge.

Recurly is excited to announce our Credit Invoices feature which provides new, automated workflows for billing scenarios that involve refunds and credits. This feature improves the subscriber experience by providing them with invoices that are easier to understand.

For finance teams, the Credit Invoices feature helps them create and maintain accurate reports. When finance teams have accurate data, they can work much more efficiently and effectively by reducing the time spent on correcting errors and discrepancies. Because reporting is less time-consuming, reports are available earlier which can be significant when critical business decisions need to be made.   

These automated workflows also reduce the workload of customer support teams who are asked to resolve billing issues.

Automating complex billing scenarios

When a subscriber’s plan changes, this can result in charges, credits, or both. Through the Credit Invoice feature, Recurly will automatically calculate the charge or credit and any proration and then issue a credit invoice.

Separating charges and credits is an accounting best practice and has the added benefit of providing your business with more flexibility in handling subscriber refund requests. Recurly also automatically generates the necessary subledger data needed to create the journal entry.

With Credit Invoices,  you can provide subscribers with a more detailed invoice that’s easier to understand. And we’ve streamlined subscriber communication by condensing communications into one subscription change email. The business can attach the invoice to the email, for added clarity.

Subscription update email

Provide the refund options your subscriber wants

There will always be times when a subscriber needs a refund. Depending on the circumstance, you may want to either refund the subscriber’s credit card or issue the refund as a store credit towards their next renewal or a future purchase.

Now with our Credit Invoice feature, issuing a refund in Recurly gives you the option to issue a store credit rather than refunding back to the original payment method.

On the invoice: Credit invoices that results from a refund now show how much of the credit amount was returned to the subscriber as a payment refund and how much remains as a credit balance.

Refund Preview screen on Recurly software

Reduce reporting errors when refunding subscribers

Having options for how you handle a subscriber’s money—whether it be the type of credit issued or when and how you are able to issue credits—helps you better meet subscriber needs, which is a key element in maintaining loyal, happy customers.

For example, refunds can be a headache when the invoice being refunded was partially paid with a store credit but your subscriber is demanding a refund to their credit card. The subscriber doesn’t care about your billing system’s limitations—they want their money back. But, because of how the original transaction was paid, refunding the subscriber will result in your billing system being out of sync with your gateway transactions. This will cause reconciliation errors that require additional manual effort to correct.

To resolve this, Recurly now gives you the option to refund a credit payment back to the subscriber’s credit card even if all or part of the original purchase was made with a store credit. The subscriber gets their money back, and you ensure that your revenue and cash accounting stay synchronized across systems.

The details: When refunding an invoice paid with a credit balance, if the credit payment originally came from a credit card purchase, Recurly will find the original purchase and issue a payment refund against it. Additionally, Recurly automatically creates a refund credit payment to ensure your reporting reflects that a portion of the credit payment was refunded back to the subscriber's credit card.

Give your business more flexibility

Sometimes, you may want to give the subscriber a credit, perhaps to compensate them for a late shipment or to reward them for new subscriber referrals. To do this, you need to be able to issue one-off credits on their own invoice, separate from charges.

You also need to ensure that your accounting team can track when the credit was issued, how much was issued, and its outstanding balance. At scale, mixing charges and credits would provide net figures that are difficult for any accountant to unwind.

To optimize this process, Recurly now allows you to issue one-off credits immediately, through a credit invoice.

Add Credit screen on Recurly software

Correct mistakes—and create an audit trail for accounting

Mistakes happen and subscription businesses need to be able to correct them. For example, a customer service agent might issue a credit by mistake, and the business wants to revoke it. In this case, Recurly now provides two options: void the entire credit invoice or void the remaining credit balance.

The details: If the credit balance was never used, you can void the entire credit invoice. If a portion of the credit invoice was used, such as for a subscription downgrade where the issued credit helped pay the issued charges, you can still remove the remaining credit balance by voiding the balance. Since a portion of the issued credits were used, the invoice moves to a closed state instead of a voided state.

On the invoice: To track that all or a portion of a credit balance was removed, Recurly creates a reduction credit payment, which can be reported in the Credit Payments export.

Invoice example

Improve reporting accuracy with new automated workflow

Not every subscriber invoice is going to be paid. At some point, the invoice will need to move out of collection to either a paid or failed state. Recurly now automates write-offs with the option to fail an invoice at the end of the dunning period. You may also choose to manually stop collection and fail an invoice at any time.

The details: With the new Credit Invoices feature, failing the invoice will now issue a write-off credit invoice to bring the failed invoice balance to zero. By automating write-off credit invoice creation, this reduces the burden on accounting teams when they have to account for failed invoices. It also improves reporting accuracy.

Invoice failed payment example Invoice write-off example

Scale your business while streamlining billing

Complex billing scenarios become an even greater challenge as your business scales. Customer support teams need to be armed with automated workflows that allow them to spend more time helping subscribers and less time trying to fix billing issues. And accounting and finance teams need clean data with clear audit trails for accurate and efficient reporting and effective decision-making. With Recurly’s new Credit Invoice feature, you’ll accomplish these goals and improve subscriber satisfaction at the same time.  

Find new and meaningful efficiencies in your billing processes with Recurly’s Credit Invoices. Learn more about Credit Invoices in our documentation.