Understand Early Termination or Reversals

Use Early termination or reversal (for Advanced Contract Changes) when a Contract is ending before its original term. Early Termination allows partial revenue recognition, while Reversal fully cancels the Contract and revenue. Both methods generate offsetting Transactions to maintain clean audit trails and accurate financial reporting.

Common use cases:

• Your Customer cancels their Contract but agrees to pay for part of it (early term)
• Your Customer cancels their Contract and pays nothing (reversal)

How it works

Once you select the Transactions to change, you can choose whether to early terminate or reverse the Transactions.

If you select an early termination, you have the ability to specify the final amount to recognize for the selected Transactions. This should be an amount equal to or less than the original Transactions. As a guide, we show you the amounts recognized and billed to date prior to selecting the final amount to recognize. Once you enter the final amount, a negative Transaction will be created equal to the difference between the original amount and the revised amount.

If you select a reversal, the original Transaction will be offset 1:1 with a negative ("adjustment") Transaction containing the same item as the original. No new Transactions will be created.

If your prior periods are closed, a cumulative catch-up adjustment is recorded in the first open period. The net difference between the original, the adjustment, and the new Transactions will be billed to your Customer using the revised invoicing schedule.

Early Termination Example:

The Customer agreed to early terminate the Contract with a revised end date of 8/31/20 and a final agreed-upon amount of $9,000.

Reversal Example:

The Customer canceled their entire original Contract and needs to completely reverse any revenue recognized to date.