Pro-ration defined

When starting or ending a contract any time that's not the typical start or end of the contract's invoicing cycle, it's best practice to pro-rate the invoice, which means to adjust the payment to reflect the accurate time period.

The pro-ration formula for invoices

To determine the amount due, divide the number of active contract days in a period by the total number of days in the period. Then, you multiply that number by the amount due in a full period.

So, if a contract with a recurring monthly payment of $3,000 started on the 10th of July, the pro-rated amount due for July is $2,032.26, because 21 of the 31 days in July were active (July 10-31), and 21/31 is 0.68, and .68 multiplied by the full period amount of $3,000 is $2,032.26.

Panther automatically calculates pro-ration whenever it's needed 🪄

PS for employees, pro-ration of salary typically does not count weekends and work holidays in the total number of days in a period. However, since contractors can technically work anytime they choose, it's best practice to consider every day as a potential active day for pro-ration purposes.

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