Invoice Example – Billing Term Change

Introduction

This article explains how Billing Cycle changes are reflected in Microsoft and the Platform Reconciliation Files. It provides a detailed example showing how transitioning from Annual Billing to Monthly Billing impacts invoice line items and helps Seller Admins understand the timing and structure of these changes.

In this article:

• Understanding billing cycle transitions
• Microsoft reconciliation file structure
• Platform reconciliation file structure

Understanding billing cycle transitions

When you change a Billing Frequency for a multi-year Subscription, the change does not take effect immediately. Instead, the new billing cycle begins at the end of the current Billing Period. This ensures continuity and proper reconciliation with Microsoft invoicing.

For example, if you purchase a multi-year subscription with annual billing and later change to monthly billing, the transition occurs at the end of the current annual charge cycle. The new billing cycle appears in the next month's reconciliation file.

Microsoft reconciliation file structure

The Microsoft reconciliation file displays charge information using specific columns that track pricing, dates, and quantities. Understanding this structure helps you verify billing accuracy.

The key columns in the Microsoft reconciliation file include:

• Charge Type - Indicates whether the charge is new, a conversion, or another type
• Unit Price - The Cost Price per license or unit
• Total - The total charge amount for the line item
• Charge Start Date - When the billing period begins
• Charge End Date - When the billing period ends
• Effective Unit Price - The actual unit price applied for the period
• Billable Quantity - The number of Licenses or units being charged

Example scenario

Consider a purchase made on September 20th, 2021, for ten Dynamics 365 Commerce licenses with annual billing. Later, you change the billing cycle to monthly. The change takes effect on September 19th, 2022, at the end of the annual charge cycle.

The Microsoft reconciliation file would show two entries: a "new" charge type for the initial annual purchase covering September 20, 2021 to September 19, 2022, with a unit price of 250 and total charge of 2,500 for ten licenses. Following this, a "convert" charge type appears for the first monthly cycle from September 20, 2022 to October 19, 2022, with a unit price of 20 and total charge of 200 for ten licenses.

Platform reconciliation file structure

The Platfrom reconciliation file provides additional detail compared to Microsoft's format, including both revenue and cost pricing perspectives. This helps Sellers understand their margin and customer pricing.

The key columns in the Platform reconciliation file include:

• Charge Type - Indicates the nature of the charge such as Purchase Fee or Correction
• Revenue Unit Price - The Customer Price per unit
• Revenue Total Price - The total revenue amount for the line item
• Charge Start Date - When the billing period begins
• Charge End Date - When the billing period ends
• Cost Unit Price - The Cost Price from the Vendor
• Customer Quantity - The number of units for the Customer
• Cost Total Price - The total cost amount for the line item

Example scenario continued

Using the same scenario, the Platform reconciliation file shows a "Purchase Fee" charge type for the annual period from September 20, 2021 to September 19, 2022, with revenue and cost unit prices both at 250, totaling 2,500 for ten licenses. Subsequently, a "Correction" charge type appears for the monthly period from September 20, 2022 to October 19, 2022, with revenue and cost unit prices at 20, totaling 200 for ten licenses.

Invoice lines will match Microsoft invoice lines.

Summary

This article explains how billing cycle changes are reflected in reconciliation files from both Microsoft and Platform. When transitioning between billing frequencies such as annual to monthly billing, changes take effect at the end of the current billing period. Understanding the structure of reconciliation files helps Seller Admins verify billing accuracy and manage customer subscriptions effectively.

Related content

• Billing Cycles and Frequency
• How to get full Reconciliation Data