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
The most important pieces of information on our invoices are the status, line items, discounts, taxes, and payment details.
- 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.
- Taxes levied on the subscription via either Avalara taxes or Custom taxes appear at the bottom of the invoice.
- Payment History
- The payments applied to an invoice, including any credits or prepayments, are shown in the Payment History section.
Discounts on a line item derive from your coupons. The total discount for the whole invoice appears at the bottom of the invoice.
Coupons do not necessarily apply to every line items, as it’s possible to apply a restriction by product or component. Consequently 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.
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.
In the image above, the top right indicates the credit note’s number and the number of the invoice to which it has been applied. It also shows the reason for the credit in the bottom right, and a breakdown of how much credit is left on this particular note.
See Credit Notes for more information.
In certain cases, such as for components with more complex pricing schemes such as stairstep, volume, and tiered, additional breakdowns may be needed to understand how the component was billed. These overviews will appear on both mid-period and renewal invoices.
Prepaid components will also populate a similar gray box titled “Prepaid Usage” that will illustrate how many allocated units were used, how many are left (if rollover of units is enabled), and how many were used in overage. Note that this breakdown will only appear on renewal invoices, as this is when overage amounts are charged for. Purchases of allocations will generate a mid-period invoice.
The “Validations” component below has all 3 prepaid settings enabled. A quantity of 100 appears on the invoice to reflect the 100 units re-allocated at renewal.
- 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.
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 controlled in your site’s invoice settings. The collection method may also be set on a per-subscription basis from the subscription summary page.
To change an individual subscriptions payment method after signup, please follow the steps below:
- In the subscription summary page, on the line item Payment Method select “Change”
- While viewing Edit Payment Method, you will be prompted to toggle between Automatic and Manual.
For invoices that are in the open or canceled status, you may shift the payment method from automatic to remittance. When viewing an invoice that falls into one of these categories, select More Options -> Change Collection Method.
This workflow is not available for invoices that are consolidated, and cannot change a remittance invoice to automatic.
Invoices are generated for all billing events in Chargify. There are two classes of generation: automatic and manual.
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.
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.
The due date field may be controlled for renewals through the Net Terms functionality. For automatic subscriptions, this means payment won’t be attempted until the specified date and dunning will follow if the payent fails; for remittance subscriptions, there currently is no dunning process if the customer pays after their due date.
It’s also possible to set a due date in the future when creating a one-time invoice. At signup, the issue date and due date for a subscription will always match.
Normal Chargify dunning still applies for automatic subscriptions; remittance dunning is not available at this time.
The important thing to remember is that each invoice has its own payment collection method. As an example, let’s say a subscription signs up on remittance billing. Their first invoice generated, A, is treated as remittance. Then, soon after, the subscription is changed to automatic, and they don’t pay off the first invoice.
When their next renewal comes around, the payment fails for invoice B and the subscription is pushed into dunning. This customer would only be responsible for paying invoice B to return to an active state. This is because invoice A is remittance and is not included in the count of open automatic invoices.
Automatic invoices may be modified to remittance through an option that appears on the invoice. For more information, please review the payment collection section above.