Client Rate Proration & Prior Period Adjustments

When you change a service and that change affects the client’s rate, Discovery automatically handles proration and — when needed — creates an adjustment so billing stays accurate.

This guide explains what happens and what you’ll see.

The Basics

Discovery prorates service charges by day.

For services billed monthly, quarterly, or yearly, the system:

• Breaks the rate into a daily amount
• Applies the correct rate to each day in the billing period
• Adds those daily amounts together for the invoice

When you enter a service change, you choose a Date of Change. That date tells the system when the new rate should start.

Two Different Outcomes

What happens next depends on whether the affected time period has already been invoiced.

If the period has NOT been invoiced yet

Discovery automatically:

• Uses the old rate before the change date
• Uses the new rate after the change date
• Prorates the invoice line item

No extra adjustment line is needed.

If the period WAS already invoiced

Discovery does not change old invoices.

Instead, it may suggest a Prior Period Adjustment (PPA) line item on the next invoice to correct the difference.

If the service does not prorate

Some services never produce an adjustment, whatever the ate.  No adjustment is offered when:

• The service is marked Pass Through
• The service's schedule type is One Time
• The client billing frequency is not Monthly, Bi-Monthly, Quarterly or Yearly
• The service has never been invoiced — there is no billed period to correct

This is different from a change that prorates but works out to nothing owed.  A service that does not prorate leaves any existing adjustment alone; a change that prorates to zero removes it.

What You’ll See When Entering a Change Date

Retroactive date (in the past)

If you enter a Date of Change in the past, you’ll see a notice explaining that:

• The service is being corrected retroactively
• Existing invoices will not be edited

If that past period was already billed, Discovery will also show a Prior Period Adjustment section with a suggested prorated amount.

Future date

If you enter a Date of Change in the future, you’ll see a notice explaining that:

• This is a scheduled change
• The new rate won’t apply until that future date

No adjustment is usually needed because nothing has been billed yet.

Prior Period Adjustments (PPA)

A Prior Period Adjustment is a separate line item added to the next invoice to correct past billing when a rate change is entered after invoicing already happened.

The adjustment can be:

• An extra charge — if the new rate is higher
• A credit — if the new rate is lower

When shown, the PPA section includes:

• Prorated Amount — pre-filled with the suggested figure, and editable
• Line Item Description — pre-filled with a generated description, and editable. This is the text that appears on the invoice line.

You can:

• Accept the suggested amount
• Edit the amount
• Enter $0.00 for no adjustment — when you are entering a new change, this means none is created; when you are editing a change, this removes the adjustment it created

How a Prior Period Adjustment Appears on the Invoice

When used, the Prior Period Adjustment is added as its own line item on the next client invoice. It does not change the original service line.

Editing a Change That Created an Adjustment

A prior period adjustment belongs to the change that created it. As long as the adjustment has not yet been invoiced, editing that change re-prices the adjustment and asks you to confirm the new figure. This applies to Level of Service, Client Billing, Client Contract and Service Creation changes.

When your edit moves the amount, a Prior Period Adjustment section appears on the form, headed "An adjustment from this change is still waiting to be invoiced." A yellow banner reads:

This change has an unbilled prior period adjustment of $XX.XX. This edit recalculates it to $YY.YY.

Enter $0.00 to remove the adjustment instead.

Set Prorated Amount to the figure you want, adjust Line Item Description if needed, and save with Submit Change. The adjustment is updated in place — it keeps its place in the revenue list and is not deleted and recreated.

You cannot skip this prompt

The amount has to be confirmed before the change will save. If you navigate away or the page goes stale, Discovery refuses the save rather than billing a figure nobody approved:

This change's unbilled prior period adjustment no longer matches the change. Reload the page and confirm the recalculated adjustment before saving.

A similar message appears when your edit creates an adjustment where there wasn't one:

This change owes a prior period adjustment that has not been confirmed. Reload the page and confirm the adjustment before saving.

In both cases: reload, confirm the figure, save again.

Which edits re-price the adjustment

• Client Base Charge — the rate itself
• The effective date of the change
• Service Schedule Type, on a Level of Service change
• Pass Through and Client Billing Frequency, on Client Billing and Client Contract changes — both decide whether the service prorates at all

If you edit something unrelated, or your edit works out to the same figure, nothing is asked and the adjustment stands as it is.

When the edit removes the adjustment

If your edit leaves no prior period to adjust, the banner says so instead and no amount is offered:

This edit leaves no prior period to adjust, so saving removes it.

Saving removes the adjustment.

Adjustments that have already been invoiced

Once an adjustment has been billed, it is fixed.  Editing the change behind it does not re-price it and no prompt is shown.  To correct a billed adjustment, credit or revers the invoice line instead.

Deleting a Change That Created an Adjustment

Deleting a change takes its unbilled adjustment with it.  The confirmation names the amount before you commit.  If the adjustment has already been invoiced, the deletion is refused.  To unwind an adjustment that has been billed, credit or reverse the invoice line rather than deleting the change.

Simple Examples

Example — Retroactive Rate Increase

• Old rate: $200/month
• New rate: $260/month
• Change date entered: mid-month
• That month already invoiced

Result:

• Original invoice stays the same
• The difference is calculated for the affected days
• A Prior Period Adjustment charge is added to the next invoice

Example — Retroactive Rate Decrease

• Old rate: $200/month
• New rate: $170/month
• Change date entered: mid-month
• That month already invoiced

Result:

• Original invoice stays the same
• The overbilled portion is calculated
• A Prior Period Adjustment credit is added to the next invoice

Example — Future Rate Change

• Old rate: $200/month
• New rate: $260/month
• Change date in the future
• That month NOT invoiced yet

Result:

• The future invoice is automatically prorated
• Part of the period uses the old rate
• Part uses the new rate
• No adjustment line is needed

Example - Correcting a Change You Already Entered

• Old rate: $200/month
• You entered a change to $260/month, backdated — Discovery created a $60 adjustment
• A day later you realize the new rate should have been $290/month
• The adjustment has not been invoiced yet

Result:

• You edit the change to $290
• The Prior Period Adjustment section reappears, recalculated to $90
• You confirm with Submit Change, and the existing adjustment is updated from $60 to $90
• Had you not confirmed it, the save would have been refused

Important Notes

• Proration is calculated by day
• Existing invoice line items are never automatically edited
• Prior Period Adjustments are used to correct already-billed time
• Setting the adjustment amount to $0.00 means no adjustment — on an edit, this removes the adjustment the change had already created
• Editing a change re-prices its unbilled adjustment, and the new amount must be confirmed before the change will save
• Deleting a change removes its unbilled adjustment; adjustments that have already been invoiced are never touched

If you have additional questions or need more in depth information, please feel free to send us a message using the help beacon in the lower right-hand corner.