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Service Contract

What is a Service Contract?​

A Service Contract is a predefined agreement between the service provider and the customer for a fixed duration, where the customer agrees to use the services and pay on a monthly basis throughout the contract period.

This system ensures predictable billing, better service planning, and customer commitment.

Enabling the Contract System​

  • The contract system is controlled globally.
  • You can enable or disable it from Global Settings by toggling the enable_service_contract flag.
  • Once enabled, contract-related configurations and features become available across the platform.
tip

Enable this feature only if you plan to offer long-term service contracts with fixed billing cycles.

Supported Payment Modes​

The contract feature is applicable only for the following payment modes:

  • Postpaid
  • Manual
warning

The contract system does not support Prepaid payment mode.

Supported Billing Cycles​

You can create contracts with the following billing cycles:

  • Quarterly – every 3 months
  • Semi-annually – every 6 months
  • Yearly – every 12 months
  • Bi-annually – twice a year*
  • Tri-annually – every 4 months or 3 times a year*
note

Bi-annual and tri-annual options are optional and can be enabled based on business requirements.

How to Configure a Service Contract​

Contracts are configured and managed from the Billing Rules section.

The following fields must be set:

  • Contract Status – Active or Inactive
  • Cancellation Deadline – Number of months before cancellation is allowed
  • Contract Discount – Optional percentage discount
  • Billing Rules – Set to Date to Date Always

Contract Execution​

When a customer provisions a Virtual Machine (VM) or any contract-bound service:

  • Contract terms apply immediately
  • The customer is billed monthly
  • Cancellation and discount rules are automatically applied and enforced

Invoicing and Billing Process​

  • Invoices are generated automatically on the 1st of every month
  • Charges reflect the monthly cost of services under contract
  • Pro-rata billing is applied for:
    • The first month (from contract start date to month-end)
    • The final month (from month start to contract end date)

The system handles discounts and cancellation enforcement based on contract settings.

Plan Change and Contract Handling​

If a customer upgrades or changes their plan during the contract:

  • The existing contract is canceled
  • A new contract is created with the updated plan and price
  • A pro-rata invoice is generated for the current month

Example:
Contract: 15 Jan 2025 – 15 Jan 2026
Plan upgrade on 15 Feb 2025 results in:

  • Pro-rata invoice for 1 Feb – 15 Feb (old plan)
  • New contract from 15 Feb 2025 (new plan)
  • Next billing on 1 Mar reflects charges from 15 Feb – 28 Feb

Benefits of Using Service Contracts​

  • Predictable monthly revenue
  • Discount incentives for long-term commitments
  • Reduced early cancellations
  • Transparent, enforceable billing and cancellation rules

Example Use Case​

Scenario: A customer provisions a VM with a 1-year contract

  • Contract Start: 15 Jan 2025
  • Billing Amount: ₹1,000/month
  • Pro-rata billing:
    • 15 Jan – 31 Jan 2025
    • 1 Jan – 15 Jan 2026
  • Invoices auto-generated on the 1st of each month
  • Cancellation blocked until 6 months completed
  • 10% contract discount applied (if configured)
note

This feature is ideal for subscription-based businesses offering services over extended periods.

Conclusion​

The Service Contract module ensures structured billing, transparent cancellation rules, and optional discounts. It enhances clarity for both the service provider and customer, especially for long-term service commitments.