Credit-based billing

Credit-based billing charges a customer upfront for a pool of credit tied to their contract, then automatically draws it down against later charges as they’re incurred. It’s the billing model behind prepaid usage commitments, recurring credit packages, and contract-length allowances.

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Bill for prepaid, recurring credit

Attach a credit grant to a phase of a customer’s billing schedule
Scope a grant to specific products, so it only offsets the charges it’s meant to
Refresh a grant’s balance monthly, quarterly, semi-annually or annually, or grant it once for the whole phase
Charge a discounted price for the credit you grant
See a grant’s balance and status alongside the rest of the schedule, and how much credit an invoice has drawn down

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How it works

A credit grant attached to a schedule phase behaves like a prepaid balance for that contract. A customer is invoiced for the grant, and from that point its balance draws down as they’re charged for the prices it covers, whether that’s usage arriving throughout the period or a fixed price on the schedule. This is different from a standalone credit grant created directly on a customer, which isn’t tied to a schedule or contract term. Use credit-based billing when the credit belongs to the contract you’re configuring, for example a prepaid usage commitment, a signup allowance, or an entitlement scoped to an introductory phase. See Credits overview for how the two approaches compare.

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Adding credit to a phase

From the billing schedule editor, open the phase you want to attach credit to and choose Add credits. Configure the grant:

• Display name: appears on the invoice as the credit line item’s label
• Amount: the amount of credit to grant
• Charge a discounted price for these credits: optional. The customer receives the full credit amount but is invoiced less for it, for example charging $0.90 for every $1 of credit granted
• Apply to: either every product in the phase, or specific products. Scoping a grant to specific products restricts what it can be drawn down against, so a usage allowance doesn’t accidentally offset a fixed platform fee
• Refresh: how often the grant’s balance refreshes and is re-charged, such as monthly, quarterly, semi-annually or annually

Changes to a grant are staged with the rest of the phase and applied together when you save the schedule.

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Drawing down against a grant

As a customer is charged for the prices a grant covers, its balance draws down automatically. Usage-based prices draw down in real time as events arrive, so a customer’s remaining balance reflects activity as it happens rather than only at the end of the billing period. If a customer holds more than one credit grant, Sequence draws down from whichever grant would forfeit its balance soonest, so credit is never left to lapse when a later-expiring grant could have been used instead. Ties are broken by the older grant. See Consuming credits for the full drawdown order.

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Seeing credit on invoices

Once an invoice is finalized, Sequence itemizes the credit contributed by each grant as its own row, labeled Credit applied - {grant name}, alongside any other totals. This appears in the invoice editor and on the customer-facing PDF, so both you and the customer can see which grants contributed to the amount due. Where credit can’t be attributed to a single grant, the row is shown without a grant name rather than guessed, so the rows still sum to the total credit received. While an invoice is still a draft, Sequence shows an Expected credit row between the total and the total due, estimating how much credit the invoice will receive once it’s finalized. This is an estimate: it can move before finalization if usage accrues or the credit ledger changes, and it’s replaced by the settled Credit applied rows once the invoice is finalized.

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Grant status and balance

Once a schedule with credit attached is saved, its detail view shows a Credit grants section, with a status badge for every grant: A grant shows as Pending as soon as it’s added to a saved schedule: It becomes Active once the invoice charging for the grant is sent, at which point its balance is available to draw down:

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Example

Modular sells Acme a contract that includes a prepaid API usage allowance:

• $8,000 of credit, scoped only to the API usage price
• Refreshed, and re-charged, monthly

Modular’s billing operator adds a credit grant to Acme’s phase, sets the amount to $8,000, scopes Apply to to the API usage price, and sets Refresh to monthly. Acme is invoiced $8,000 at the start of each month, and the balance draws down automatically as their API usage arrives.

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Frequently asked questions

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Next steps

• Learn how billing schedule phases work, since a credit grant is always attached to one
• See how credit is drawn down and prioritized across multiple grants
• Compare with standalone credit grants for credit that isn’t tied to a schedule