Terminate Commitment

Overview

Terminate Commitment allows you to end an active commitment and all associated billing terms (BTs) as of a specific date.

This is the recommended workflow for handling amendments to commitments after invoicing has begun, since commitment data cannot be edited retroactively.

What happens when you terminate a commitment

When a commitment is terminated:

• The commitment, all associated billing terms, and performance obligations are ended up to and including the termination date

• Any activity after the termination date must be recreated under a new commitment

• This action does not automatically create a new commitment — you will need to recreate it manually based on your desired outcome

How usage is handled

• Usage is tied to billing terms based on event datetime

• If usage occurs after the termination date, it will:

  • Automatically move to the appropriate new billing term

  • Retain the same event type

• No manual intervention is required for usage reassignment

Important:

• Overages are not affected and remain intact

• True-up line items within the terminated period are removed by default

  • If needed, they must be added back manually

How revenue is handled

• The original service period is updated to end at the termination date

• Revenue is recognized based on the updated service window

• Any newly created commitment will follow standard revenue handling

Recommended approach

1. Terminate at the boundary of a commitment period (preferred)

   1. This is the cleanest and most predictable approach.

   2. Why:

      1. No partial periods

      2. No complex recalculations

      3. Simpler billing and reporting

2. Mid-period termination (supported, but more complex)

   1. If you terminate mid-period:

      1. You will need to recreate commitments and billing terms

      2. Tabs recommends using a burn-down approach:

         1. Calculate how much of the commitment has been used

         2. Create a new commitment for the remaining balance

Prepayments (applies to all scenarios)

If your commitment was prepaid:

New commitment amount

• Based on remaining unused balance ± any changes

Examples:

• Increase: remaining balance + additional amount

• Reduction: remaining balance − reduction amount

Credit memos

• Issue a credit memo for unused balance on the original commitment

• Apply it to the new invoice

Optional:

• For reductions, you may:

  • Issue an additional credit memo

  • Process refunds outside of Tabs

Common scenarios

Aligned billing and commitment periods

• Billing period and commitment period match (e.g. monthly + monthly)

• Termination cleanly splits into:

  • Old period (terminated)

  • New commitment starting after

Commitment spans multiple billing periods

• Example: quarterly commitment, monthly billing

• One commitment covers multiple invoices

• Termination requires:

  • Splitting billing terms

  • Recreating future billing periods under a new commitment

Billing period spans multiple commitment periods

• Example: quarterly billing, monthly commitment

• Multiple commitment periods exist within a single invoice

• True-ups and adjustments are consolidated into the billing period

Single commitment period (no intervals)

• Entire contract is one commitment period

• Termination ends the commitment and requires recreating the remaining portion

Sequential or step-up commitments

If commitments are structured over time (e.g. increasing values):

• Terminating one commitment will also:

  • Terminate all future commitments in the sequence

  • Terminate associated billing terms

• You must recreate the remaining structure manually

Key takeaways

• Termination is the only supported way to modify commitments after invoicing

• It is a destructive action — nothing is automatically recreated

• Boundary-based termination is strongly preferred

• Mid-period changes require manual reconstruction using burn-down logic

• Always validate:

  • Remaining balance

  • Billing term coverage

  • Credit memo application

When to use this feature

Use Terminate Commitment when:

• Contract terms change after invoicing has started

• You need to:

  • Adjust pricing

  • Change commitment size

  • Modify structure or duration

• You want to avoid inconsistencies in billing or revenue recognition

Need help?

If you're unsure how to model a specific amendment scenario, reach out to Tabs support with:

• Current commitment structure

• Desired end state

• Termination date

We’ll help you map the cleanest path forward.