Subscription lines in subscription billing

Subscription lines represent obligations to customers and suppliers. They usually begin with the delivery of an item to the customer, include subsequent support, and govern billing arrangements. A subscription line can also be the subject of provision itself, for example, in the case of a support service.

During the sales process, all relevant information about appropriately set up items is collected and stored in the form of a subscription. The subscription is created automatically when the item is delivered (posting of sales shipment).

Subscription line templates and subscription line packages are available for mapping and setting up subscription lines. Subscription lines are grouped into contracts (customer and vendor subscription contracts) for management and billing purposes.

Subscription lines include the details of the obligations that the supplier of a product assumes towards its customers, which in turn are covered by its supplier, if applicable.

The following image shows the use of subscription lines.

Subscription packages​

Subscription lines are grouped into subscription packages. You can use then Assigned Items action to assign them to items. At the time of delivery, the variable parameters (such as price calculations and durations) are converted into absolute values and attached as subscription lines to the sold item (subscription).

A subscription package corresponds to the unit that's offered and sold to the customer. Both the service liabilities to the customer and the service receivables towards the own suppliers can be stored.

Subscription package​ line templates​

You can create subscription line templates to simplify the process of creating subscription packages and the details on their lines. The following section explains the interrelationships of the fields.

Overview of subscription package​ and subscription package​ line fields

• In addition to the unique Code and Description, you can specify a Price Group in the header to use when pricing subscription lines. To learn more, go to Price group in sales subscription lines and subscriptions​.
• Partner specifies whether to create a customer or vendor subscription line later. Accordingly, the subscription lines can then be called into customer or vendor subscription contracts and invoiced through purchase or sales invoices.
• Template indicates whether the line was created based on a subscription package​ line template. Specifying a subscription package​ line template is optional. You can also manually enter the line.
• Description specifies the description of the subscription package​ line.
• To learn more about the Invoicing field, go to Types of subscription package lines​.
• To learn more about the Invoicing via Item No. field, go to Control revenue accounts​ via invoicing items.
• To learn more about the Calculation Base Amount Type field, go to Pricing and calculation types.
• Calculation Base Amount % is the percentage of the calculation base amount that is used in the sales process to price the subscription lines.
• Calculation Base Period specifies the period to which the service amount should subsequently relate. For example, enter 1M if the amount refers to one month, or 12M if the amount refers to one year.
• Billing Rhythm defines how often to bill subscription lines.
• The dateformula in the Subscription Line Start Formula field specifies the time offset at which a subscription line becomes valid.
• Initial Term specifies the minimum term of the subscription lines. If the initial term is entered in the sales process and no Subsequent Term is entered, the service end date is automatically set to the end of the initial term.
• The dateformula in the Subsequent Term field specifies the duration of the automatic extension after the initial term. If the field is blank in the sales process, and either the Initial Term or the Notice Period is set at the same time, the service end date is automatically set to the expiration date of the initial term or the notice period.
• The dateformula in the Notice Period field specifies the lead time before a subscription line can be cancelled. A 12 month initial term with a three month notice period means that the due date for termination is reached after nine months.
• Discount is used to control whether the subscription line is used for discounts during periodic billing.
• Price Binding Period defines the period in which the price won't change after the subscription line is created. When the subscription line is created, the Next Price Update date is calculated from the Subscription Line Start Date and the Price Fixing Period. You might need to personalize the page to display the field.

Dimensions​

If a subscription package contains lines with both Partner=Customer and Partner=Vendor, the dimensions of the later customer subscription contract line pass to the corresponding vendor contract line. This is important when you analyze data, for example, the subscription package code is identical in data on both customer and vendor sides.

Price group in sales subscription lines and subscriptions​

Before the prices for the subscription lines in the sales document can be calculated for the selected line item, the appropriate subscription package(s) must be determined, including any price group assigned. The following applies:

• If the price group isn't set in the document, only subscription packages without the price group are used.
• If the subscription package is set in the document, only subscription packages with the same price group apply. If no subscription packages match the price group, subscription packages without price group are also considered. Subscription packages that are set as default for the item apply directly. Others are display-only.
• If a subscription package without a price group isn't found, all subscription packages are considered. The default package for the item applies directly. Others are display-only.
• If no subscription package is found, no sales subscription lines are created.

The determination of subscription lines when manually creating a subscription is done in the same way as the creation and calculation of sales subscription lines. However, if you change the end user (customer) in the subscription, the subscription lines must be recalculated if the price group of the new end user (customer) and the subscription differ. The user receives a corresponding query. If they confirm, the subscription lines are deleted and recreated based on the above criteria. Otherwise, the end user (customer) resets to the original value.

Types of subscription package lines​

• Contract

  A subscription package​ line for a subscription where the Invoicing via field is set to Subscription Contract will be brought to invoicing in a defined cycle. Optionally, you can specify terms and notice periods.

• Sales

  A subscription package​ line for a subscription where Invoicing via is set to Sales won't be invoiced. The subscription and subscription line serve as information only (for example, for the warranty period or the after-sale to a warranty).

Pricing and calculation types​

Three types of reference values are used to price subscription lines via the Calculation Base Type field:

• Item Price
• Document Price
• Document Price And Discount

To learn more, go to Price determination of Subscription Lines.

Control revenue accounts​ via invoicing items

Subscriptions that you sell along with an item are usually handled by an invoicing item. Depending on the configuration of the posting groups in General Posting Setup, revenues can post to different revenue accounts for each subscription line to bill. The lookup of the Invoicing via Item No. field shows only invoicing items.

Subscription items that are themselves the subject of provisioning (such as a support service) can also contain the posting groups for revenue control. In this case, the Invoicing via Item No. field is left blank.

Example: Warranty as a subscription line​

When a product is sold, a warranty is required by law. This means that the supplier of a product guarantees that the products it supplies have the promised properties. The warranty is usually limited in time.

The statutory warranty can be supplemented by additional warranties or services that you can create as subscription lines. For example, manufacturers might grant the customer an extended warranty period from the date of purchase or even subscription lines that go beyond what is legally required. For example, free on-site replacement of defective parts.

A subscription line can represent the mapping of these commitments. It contains all relevant service agreements, such as prices (usually zero), validity periods, cancellation periods, and the billing rhythm. Just like other subscription lines, the subscription line must be assigned to a contract to be billed (on a recurring basis until it expires). The contract number then displays in the subscription line.

The following example shows a warranty set up as a subscription line. The warranty is free of charge and runs for 12 months.

The subscription package contains both a customer and a vendor line, so the customer can make claims within the specified period, but these are also covered by subscription lines towards the supplier (for example, the vendor has provided warranty for the items sold).

Related information

Sales process