# Proration
## What is Proration?
Proration is the proportional adjustment of billing charges when a swap or plan change occurs mid-cycle. It ensures customers only pay for the actual time each asset was used.
## Key Concepts & Terms
| **Term** | **Definition** |
| ------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Unused Period | The part of the billing cycle not used under the original asset. |
| Adjustment Credit Note (Adj CN) | A credit applied directly to an existing invoice to reduce its unpaid balance. |
| Refundable Credit Note (Ref CN) | A standalone credit issued when the invoice is already paid; can be refunded or applied later. If linked to a payment, it can be refunded or applied to another outstanding invoice. If not linked to a payment, it can only be applied to another outstanding invoice. |
| Pro-rata Invoice | A new invoice covering the remainder of the current cycle under the new asset's rate. |
| Full Invoice | The regular billing invoice for the upcoming complete cycle. |
## Calculation Formula
```
Pro-rata Amount = (Days in Unused Period ÷ Total Days in Cycle) × Booking ongoing fees
```
## Billing Scenarios & Adjustment Logic
For all billing frequencies—and regardless of payment method—the process unfolds in a consistent structure:
1. **Calculate unused period** on the existing asset and issue an **Adjustment Credit Note**.
2. **Issue a pro‑rata invoice** for the remaining period on the new asset.
3. **Generate the full invoice** for the next billing cycle.
4. **Handle credits differently** based on whether the current invoice is unpaid, paid electronically, or paid via credits.
## **Special Handling Examples:**
* **Scenario: Last Invoice Unpaid**
* Create and apply **Adjustment Credit Note (Adj CN)** to reduce the outstanding balance.
* Issue the **pro-rata invoice** for the new asset and the **full invoice** for the next billing cycle.
* **Scenario: Last Invoice Paid via Electronic Payment**
* If any amount is still outstanding, create and apply an **Adj CN** to reduce the balance.
* If there is a remaining amount for the unused period of the last invoice, issue a **Refundable Credit Note (Ref CN)** linked to the payment — refundable or applicable to another invoice.
* Issue the **pro-rata invoice** and the **full invoice** for the next billing cycle.
* **Scenario: Last Invoice Paid Using Credits**
* If any amount is still outstanding, create and apply an **Adj CN** to reduce the balance.
* If there is a remaining amount for the unused period of the last invoice, issue a **Ref CN** not linked to a payment — can only be applied to another invoice.
* Issue the **pro-rata invoice** and the **full invoice** for the next billing cycle.
* **Scenario: Last Invoice Paid Using Credits and Electronic Payment**
* If any amount is still outstanding, create and apply an **Adj CN** to reduce the balance.
* If there is a remaining amount for the unused period of the last invoice:
* Issue a **Ref CN** linked to the payment — refundable or applicable to another invoice.
* Issue a **Ref CN** not linked to a payment — can only be applied to another invoice.
* Issue the **pro-rata invoice** and the **full invoice** for the next billing cycle.
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