Intro to Relationship Invoicing

Relationship Invoicing is a new, opt-in feature. It is a replacement that unifies both Statements (automatic collection) and Invoices from "Invoice Billing" (manual collection). This page is only applicable to newly created sites that choose "Relationship Invoicing" for bill presentment.

Invoices are financial documents that represent a sale by a seller (merchant) to a buyer (customer). In Chargify, invoices are issued for all billing events: subscription signup, subscription renewal, prorated changes, and one-time charges. Our invoices contain the following:

  • Details about the merchant (contact and business information)
  • Details about the customer (name, contact information and addresses)
  • Line items detailing each item being sold (quantity and price)
  • Discounts applied to each line item and the invoice as a whole
  • Taxes applicable to each line item and the total tax being collected
  • Totals and summaries for the entire sale
  • An invoice status, including amount due or paid
  • Payment history

Relationship Invoicing Now In Beta

Relationship Invoicing is a new method of bill presentment for you and your subscribers. For merchants who opt-in, Relationship Invoicing replaces both Statements and Classic Invoices as the way to view the billing of your subcribers. The same kind of invoice document will be generated for all billing scenarios, regardless of whether collection is automatic on a credit card or remittance via manual payment. This gives you one view into all of the billing performed by Chargify.

You will also see us refer to this new feature as “Invoice Architecture”. Under the hood of Relationship Invoicing is a powerful new architecture based on invoices that will allow you to do things with invoices that you could never do with statements.

If you’d like to know more about what is different between this method of invoicing and the old way of statements, see Invoices vs. Statements & Transactions below.

Anatomy of an Invoice

Status

Invoices seen by the customer are usually either Open (unpaid) or Paid. The status area provides the current invoice status at-a-glance. See “Invoice Statuses”, below.

Line Items

Invoices are primarily composed of line items. Each line item contains a name, description, quantity, unit price, and subtotal.

You’ll see one line item on an invoice for each product and component on a subscription.

Discounts

Discounts on a line item derive from your coupons. The total discount for the whole invoice appears at the bottom of the invoice.

Since your coupons do not necessarily apply to every line items (application is controlled by Coupon Restrictions), there is a “Discounts” box that enumerates the coupons applied. Each coupon is numbered, and each line item is denoted with a matching superscript number where the coupon applies.

Taxes

Taxes levied on the subscription via either Avalara taxes or Custom taxes appear at the bottom of the invoice as well.

Credits

(Not Pictured)

Some actions generate a credit on a subscriber account. A common example is a prorated downgrade.

Credits are captured in “credit notes” (also sometimes known as “credit memos” or “credit invoices”). A credit note is like a “reverse invoice” - it contains line items representing the amount credited to specific items (products and components) and sometimes must also “return” amounts already discounted or taxes already paid.

When a subscriber has a credit balance, the available balance is applied to an invoice when it is issued, like a payment. Credits reduce the invoice due amount, like a payment.

See Credit Notes for more information.

Payment History

The payments applied to an invoice (including any Credits or Prepayments) are shown in the Payment History section.

Invoice Statuses

  • Draft: A Draft invoice is a temporary status of an invoice in the middle of being composed. Draft status is usually seen on manually generated invoices, before they are issued.
  • Pending: A Pending invoice is one generated automatically that is still collecting charges before it is issued at the next normal renewal. An example is an invoice that represents mid-period prorations that are being accrued until the next billing.
  • Open: An Open invoice has been issued and is ready for payment, but has not yet been fully paid.
  • Paid: A Paid invoice has been paid in full.
  • Voided: A merchant may manually void an invoice, which marks it with the Voided status. A voided invoice does not expect payment and does not affect revenue.
  • Canceled: A Canceled invoice is one that was open when the Subscription was canceled (whether through dunning or intentional cancellation). Canceled invoices are different from voided invoices in that they represent “uncollected amounts” for revenue purposes. Canceled invoices may be re-opened in the case of a reactivation.

Collection Methods

There are two methods for invoice collection: automatic and remittance.

  • Automatic Collection: Chargify attempts to collect payment automatically from a payment method on file (credit card or ACH) when the invoice is issued.
  • Remittance Collection: Chargify does not attempt to automatically collect payment. Instead, your customer remits payment on the invoice, often in the form of check or bank draft, in response to receiving the invoice.

The default collection method is controllled in your Invoice Settings. The collection method may also be set on a per-subscription basis from the Subscription Summary page - click the “Change” button in the “Payment Method” section.

When Invoices Are Generated

Invoices are generated for all billing events in Chargify. There are two classes of generation: automatic and manual.

Automatic Generation of Invoices

Chargify generates invoices for the following billing events:

  • Signup: When a new subscription starts.
  • Renewal: When an existing subscription periodically renews.
  • Prorated upgrades for immediate capture: When a prorated upgrade is made and immediate capture of the due amount is desired, an invoice is generated and issued for the upgrade.
  • Prorated upgrades for delayed capture: When a prorated upgrade is made and capture of the due amount is delayed, the upgrade charges added to a pending invoice (either an existing one or a new one as necessary). The pending invoice is issued when normal renewal occurs.

Note that prorated downgrades generate a Credit Note (like a “reverse invoice”) that is applied against subsequent invoices.

Manual Generation of Invoices

Coming Soon: Generate ad-hoc invoices on-the-fly for your subscribers.

Issue Date and Due Date

Invoices advertise two main dates: the issue date and the due date.

  • Issue Date: the date the invoice is made available for payment. This happens after all line items have been added and the invoice is not expected to change after this date.
  • Due Date: the date the invoice payment is due.

Currently, these dates will always match, since Chargify only supports the concept of “immediately due” invoices. In the future, we will have features that allow for invoice due dates to be pushed out from the Issue Date.

Invoices & Dunning

Normal Chargify dunning still applies, even for the new invoices.

The important thing to remember is that dunning operates on a per-subscription basis based on the status of the subscription, not necessarily the status of the invoice(s). When the subscription is past due, it implies that there are one or more invoices in an Open status past their due date. When Chargify attempts to collect payment for a past due subscription, it attempts to collect the entire amount due on all open invoices.

Getting Started

Opting In

Relationship Invoicing is an opt-in feature for new sites.

Note: The ability to enable Relationship Invoicing on existing sites will come later. See Future Plans below.

Creating a Site with Relationship Invoicing

When creating a new site or editing a site with no subscriptions, you will be given the option for your “Bill Presentation”. You may pick either “Statements and classic invoice-billing” (the prior scheme) or “Relationship Invoicing (Beta)”.

This is a new feature, so we recommend doing extensive testing to make sure you understand how your billing flows and customer communication behave with Relationship Invoicing. Even though the APIs are compatible and much doesn't change, enough does change that you will want to ensure you understand all of the implications before going live.

Review Your Invoice Setings

Your first task in Relationship Invoicing is to review the settings (via Settings -> Invoices) to configure how you want your invoices to look and act.

We recommend the following first steps:

  1. Upload a logo to display on your invoices
  2. Pick your default collection method, automatic or remittance. (Automatic collection attempts to collect automatically from the card on file, whereas remittance collection prompts the customer for payment, which get recorded against the invoice by a human)
  3. Turn on invoice emails for both automatic and remittance collection
  4. Customize your email templates for emails that are sent when invoices are issued

Generate Some Subscriptions

Create a product or two and, optionally, some components. Then, create some subscriptions using your own email address and watch the invoice emails roll in!

Some suggestions:

  • View the invoices online and see how they will be presented to your customers.
  • Tweak your invoice settings to refine the experience for your customers
  • Add some coupons and see how discounts are presented

Next Steps

  • Learn about the invoices API so you can access your invoices programatically and even present them to your customers on your own website
  • Send us your feedback or questions by emailing support@chargify.com
  • Read through the rest of our documentation via the links below

Invoices vs. Statements & Transactions

These new Invoices will replace Statements and Transactions as the main document to view/understand recurring billing charges. Statements and transactions will remain available in the API to continue to support existing integrations. However, invoices are replacing statements as a method of presenting recurring charges to your subscriber in emails, downloadable documents, and the Chargify app itself.

What Changes?

For Merchants:

  • Instead of viewing statements and transactions to review billing history, you view invoices.
  • You control the full contents of the email sent to the customer when an invoice is generated (and, whether or not it is sent).
  • Instead of one-time charges, you create an invoice to represent your charges, which may have multiple lines (Coming Soon).
  • Instead of applying arbitrary “adjustments” to a subscription’s balance, you edit invoice line items, void invoices, or add new invoices (Coming Soon).
  • Instead of applying a payment to a subscription, you apply a payment to one or many invoices.
  • A new invoice API is available.

For Customers:

  • The invoice email now contains whatever content the merchant defines.
  • The invoice may optionally be viewed online on the chargifypay.com domain.
  • The invoice may optionally be paid online (Coming soon).

For Everyone:

  • Invoices are more clear than statements and are more pleasing to view.
  • Discounts, and where they applied, are more clear.
  • Taxes, and where they applied, are more clear.

What Stays the Same?

  • No changes to your catalog configuration (products, components, coupons, or taxes).
  • No changes to the Chargify billing engine.
  • Even though the screens for Statements and Transactions have been removed in favor of the Invoices screen, the APIs for Statements and Transactions remain unchanged to support your existing API integration.
  • Subscription management (upgrades/downgrades/cancellation/dunning) remain the same.

Future Plans

We’re rolling out Relationship Invoicing over time to make the transition as smooth as possible. Your existing integration will continue to work without programming changes. Over time, however, you will need to adapt to use the new tools we provide in the interface (i.e. view and configure new Invoices instead of old Statements). As a benefit, powerful new features such as Invoice Consolidation and Customer Hierarchies will become available.

Here is a rough rollout schedule for Relationship Invoicing:

  • Jan 2018: Introduced for early access adopters
  • May 31 2018: Available as opt-in on new sites for everyone
  • Late-2018: Becomes the default for new sites, and old sites can be optionally converted
  • Later: Relationship Invoicing completely replaces Statements and Classic Invoices in the app (except for the API)