Overview
Habu offers the powerful tool of pro rata invoicing.
When it comes to memberships, this is often overlooked in favor of 2 alternative strategies: (1) starting all memberships on the 1st of the month, or (2) having memberships that start on different dates. The first option can feel rigid and strict, though great for cashflow and keeping things simple. The second is easy up front, but back loaded with complexity.
Pro rata invoicing for memberships is often overlooked because prorating invoices can seem fussy or complicated. But the benefit is that it combines flexibility for your members, with providing you with predictable cash flow.
In this article we look at how prorating works and at some of the benefits.
Details
The first thing to cover, is what proration is which is; the proportion of something that's exactly calculated. In our case, we want to calculate how much we need to invoice for based on the price of the membership and the remaining number of days until the end of the month.
Below is an example of proration applied to a membership subscription that started on the 3rd of August:
We can see here that Habu has calculated the first month pro rata due to the plan starting on the 3rd of August. Habu has also generated the charge for the next month starting from the 1st day of the month at the full price of the membership subscription.
From here you can instantly create and email the invoice over to your new member. And depending on your automation settings, you can go from a manual to a fully hands off approach with billing with this member.
[You can read more about Auto Billing and Auto Payments by clicking the links]
It's important to note when your creating a new subscription that by default, today's date is set as the start date of the subscription (and therefore the billing date). If your member is starting at an alternative date or on the 1st of the month, this is the place to change it:
