[Subscription billing: Part-3] Item type for Recurring contract billing in Microsoft Dynamics 365 finance and operations

In the next blog, I will explain another configuration available on billing schedule which is item type.

If you have not visited first two parts, click here to read: Part-1 and Part-2

Item type is used to define the type of billing for the customer. There are three types of item type:

  1. Standard:

In this method billing for the customer is done based on different pricing option based on quantity available on the billing schedule line

  1. Usage:

In this method billing is done based on usage for each billing period, it has two options Reading and consumption., So let’s understand this by one scenario:

“USMF has 6 months support contract with customer US-001 where billing is done monthly bases based on number of hours consumed every month.”

  • Reading Option:
  • Consumption option:
  1. Milestone

Milestone billing functionality in Subscription billing, for each line in the milestone template, you can define the allocation percentage or amount. You can then assign the milestone template to billing schedule items that use the milestone billing functionality.

  • Setup: Milestone template and item mapping with template

There are different methods for allocation:

  1. Percentage of completion – A cumulative completion value is used for each line.
  2. Percentage – A percentage amount can be specified for the allocation. The sum of all percentages must equal 100.
  3. Variable amount – An amount can be specified for the allocation. The allocation amount is specified at the transaction level.
  4. Equal amount – The allocation percentages are automatically calculated and equally split among the items in the template.

Read here for details about milestone billing.

  • Process: Let’s understand this also with one scenario: Let’s say USMF has a 1 M USD project contract with customer US001 which will be executed in three phases, now billing contract is based on each phase completion. So, on phase -1 completion 20% will be billed, Phase-2 50% and phase -3 remaining 30%”

Add product and milestone template

View billing schedule

That’s it for this blog, next blog will be coming with few more other configuration and features available as part of recurring contract billing.

Thank YOU!!! Keep reading and sharing!!!

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