How to update the credit note line items service period as on invoice billing period?

Problem Statement

You want to know how to update the credit note line items service period as on invoice billing period.### Scope

My credit note shows the creation date instead of the billing period; why?

Do we have settings to choose between credit note creation date and invoice billing period while creating credit note?

How do I choose the service period of line items while creating a credit note?

Why is there a difference in the Service Period of the Credit Note and the Invoice?

Summary

The service period for the line items in the credit notes will be the date on which the credit note is generated. This may impact Net Revenue on accounting reports. With the help of "The line items' billing period on the invoice" settings, the service period for the line items in the credit notes will be the same as their respective billing periods on the invoice.

This allows for clearer revenue recognition, wherein the credit note generation does not reflect against a single month but instead gets distributed across the entire billing period.

Navigate to Settings > Configure Chargebee > Billing LogIQ > Billing & Invoices > Set default service period for credit note line items.

Solution

The line items' billing period on the invoice** enables the credit note line items to show the full service period value accordingly for the credit notes created manually (Create Credit note, Void and Write off operations) and credit notes created during Dunning and **Subscription Cancellation as configured. This full service period now flows into downstream systems like RevRec tools and accounting integrations to ensure that the credits are spread across the entire service period.

This feature also positively impacts cancellation invoices because the credit note for a voided invoice automatically shows the full service period.**

When a credit note is generated for an invoice, the service period for the line items in the credit note is also captured, which can be displayed on the credit note PDFs.

You can display either of the following as the service period of the line items on your credit notes:

• The line items' billing period on the invoice: The service period for the line items in the credit notes will be the same as their respective billing periods on the invoice. This allows for clearer revenue recognition, wherein the credit note generation does not reflect against a single month, but instead gets distributed across the entire billing period.
• The credit note generation date: The service period for the line items in the credit notes will be the date on which the credit note is generated.

The service period gets displayed accordingly regardless of whether the credit note is generated manually, or automatically when an invoice gets voided, cancelled, or through dunning.

To configure the default service period for credit note line items, follow these steps on your Chargebee site:

1. Click Settings > Configure Chargebee > Billing LogIQ > Billing & Invoices > Set default service period for credit note line items.

2. On the Set default service period for credit note line items popup, select your preferred option from the drop-down.

   

   You can choose from the following options:

   • The line item's billing period on the invoice
   • The credit note generation date

3. Click Apply.

The credit note details page and the credit note PDF display the service period for the line items based on the above setting.

Creating a Credit Note for a Line Item

Chargebee allows you to create Credit Notes for individual line items if your Invoice has more than one line item. You can choose to create a credit note for the entire line amount or a part of it. The below visualization shows how to create credit notes for one or more line items.

Proration and Credit Note Creation

During a subscription change, Credit Notes created due to proration (adjustment or refund) will be generated depending on the invoice status. Learn more.

Time Zone of Credit Notes:

Credit notes will be recorded in the time zone of the Chargebee site at the time of generation. However, if you change the time zone, the newly generated credit notes will follow the new time zone, and the ones that were already generated will be recorded in the previous time zone. Say you had your Chargebee site set to follow PST until the 30th of April. On the 1st of May, you change the time zone of your Chargebee site to EST.

The credit notes generated until the 30th of April will be in PST, and the credit notes generated after the 1st of May will be in EST. For invoices that are impacted by the time zone alteration, a banner with the details of the change will be displayed on the Credit Notes Details Page.

You can view all the Credit Notes that you have created by clicking Invoices and Credit Notes > Credit Notes.