Creating Prorated Contracts
- Cathy Beckstead
- Kristen Campbell (Unlicensed)
The Prorated Contracts feature in Member Manager simplifies the enrollment process by automatically prorating the initial pre-payment for a new membership contract.
For example, if a member enrolls on the 15th of the month, and their payment due day is the 10th of every month, their pre-payment is automatically prorated to include the 15th of the month through the 9th of the following month.
By calculating pre-payments based on the precise enrollment date, this feature ensures members are billed accurately.
Configuring Monthly Proration on Contracts
Configuring your monthly prorated contracts is straightforward. Follow these steps:
Navigate to Setup > Inventory > Packages.
Next, edit an existing contract or create a new contract by clicking the Add Contract button. (Click here for more details on creating a new contract.)
Note: Monthly proration only applies to contracts, not packages.
To configure proration, head to the Renewal Details section, where proration settings are managed. Keep in mind the following requirements when configuring proration:
Contract Type: Must be set to "Term" or "Ongoing".
Payment Frequency: Must be set to "month(s)".
Prorate First Month: Ensure this checkbox is checked.
Payment Due Day: This number refers to the day in the month that payment is due, and therefore must be set to a value other than zero. For example, enter 1 for accounts that bill on the 1st of the month, 10 for accounts that bill on the 10th of the month, and so on. Member Manager will set up the contract with the prorated amount to cover the time from “Contract Start Date” to the next “Payment Due Day”. This amount will be shown under “Due Today” and will include any initiation fees or down payments entered.
After entering all required fields, scroll to the bottom and click either “Save” or “Save and Exit” to save the contract.
Point of Sale (POS) Experience
You can sell a prorated contract from the POS system in Member Manager. To do so, during the sales process, you’ll edit the contract details by clicking “Edit/View Details”. Keep in mind, if a contract is prorated (The “Prorate First Month” box is checked), there are specific requirements to consider:
Payment Frequency: Only monthly contracts can be prorated, therefore this field is set to “1 Month(s)” by default and is disabled. Payment Frequency cannot be updated unless the “Prorate First Month” box is unchecked.
Contract Start Date: All prorated contracts must start on the date of the sale, therefore this field is set to the current sale date by default and is disabled. The “Contract Start Date” cannot be updated unless the “Prorate First Month” box is unchecked.
Free Payments: This field is set to “0” by default and is disabled. “Free Payments” cannot be updated unless the “Prorate First Month” box is unchecked.
Override Payment Due Day: Should you wish to override the “Payment Due Day” that was entered during the contract set-up, you can do so here by unchecking the “Prorate First Month” box. Keep in mind that this number refers to the day in the month payment is due, and therefore must be greater than “0”. For example, enter 1 for accounts that bill on the 1st of the month, 10 for accounts that bill on the 10th of the month, and so on. Member Manager will set up the contract with the prorated amount between “Contract Start Date” and the next “Payment Due Day”. This amount will be shown under “Due Today” and will include any initiation fees or down payments entered.
In the screenshot below, you’ll see that these fields are grayed out indicating that they cannot be updated unless the “Prorate First Month” box is unchecked.
To update any contract details, users must click the "Save & Update Payment Schedule" button. This action will regenerate the Payment Schedule displayed below the details section. The schedule includes the prorated amount in the pre-payment.
If an initiation fee and down payment are set, the payment schedule will display a pre-payment that includes the prorated amount, the down payment, and the initiation fee. For example, if a contract is configured for 12 payments, the schedule will show a pre-payment that combines these amounts, followed by 12 additional payments.
Note: If you want the pre-payment to count as one of the 12 payments, set the "Number of Payments" to 11 and recalculate the payment schedule using Save & Update Payment Schedule.
In the example below, using the contract details above where the contract is prorated, the Initiation Fee is $50, the Down Payment is $100 applied to the pre-payment, and the contract starts on July 26, 2024 with payments due on the 15th of every month, the pre-payment amount is broken down as follows:
Prorated amount: $115.48
Initiation Fee: $50.00
Down Payment: $100.00
Tax: $13.27
Total pre-payment: $278.75
After finalizing the contract details and capturing the member’s signatures, you will be directed to the “Items in Cart” screen. In the “Checkout” section, the original item amount is deferred; this becomes “payment 1” and is due on the set Payment Due Day and displayed as “Deferred Payment”. The Checkout section also shows the Down Payment, the Initiation Fee and the prorated amount labeled as “Prorated First Month”.
Next, proceed to checkout, select a payment method, and complete the payment process.
Member Portal Experience
Members can purchase prorated contracts through the Member Portal using the "Enroll" function. Discounted contracts are clearly marked, with the original price shown as strikethrough and the discounted price displayed beneath it.
When you click on the contract, a detailed view will be displayed. This view clearly shows the prorated amount, accompanied by a "P" tag or tooltip to indicate that the contract is prorated.
Members can click “Join Now” and proceed through purchasing the contract. Click here for an overview of the Member Portal and details on purchasing contracts.