How Zenskar Manages Prepaid with Drawdowns

In Zenskar, prepaid or credit-based contracts allow customers to make an upfront payment in exchange for a defined pool of entitlements (credits or quantities). These entitlements are systematically drawn down over time as they are consumed, and the drawdowns are applied against future invoices.

Managing this process accurately is critical, as it directly impacts:

• Transparency for the customer (knowing how much balance is left).
• Accuracy in invoicing (no double charges or missed consumption).
• Operational efficiency (avoiding manual reconciliation).

Zenskar provides a robust and automated way of handling drawdowns, ensuring clarity in both invoices and entitlement tracking, while most other vendors struggle to implement this effectively.

How Zenskar manages prepaid with drawdowns

Zenskar’s system is designed to seamlessly integrate prepaid credits with product consumption, ensuring both financial accuracy and customer transparency.

Step 1: Granting entitlements

• When a prepaid contract is initiated, Zenskar generates an invoice for the upfront payment.
• Against this payment, entitlements (credits) are automatically created and assigned to the customer account.
• Example: A $20,000 prepaid invoice grants 20,000 credits.

💡Read more: How to Recognise Revenue for Prepaid Usage

Step 2: Applying drawdowns

• As products are consumed in subsequent billing periods, Zenskar automatically applies drawdowns against the entitlement balance.
• Example:
  
  • Product A costs $500 per unit.
  • If the customer consumes 15 units, that equals $7,500.
  • Instead of charging again, Zenskar deducts 7,500 credits from the entitlement balance.

Step 3: Invoice presentation

Zenskar makes drawdowns completely transparent by reflecting them directly in the invoice.

On the invoice, under the Consumption section, customers see:

• Starting Balance: 20,000
• Quantity Consumed: 7,500
• Balance Left: 12,500

Since the consumption is covered by the entitlements, the invoice amount is shown as zero.

Step 4: Real-time tracking on customer page

On the Customer Portal, an Entitlements section provides real-time visibility into the balance.

Customers can always track:

• How many credits were granted.
• How much has been consumed.
• How much remains available.

💡Read more: Adjusting Entries When Refunds & Credit Notes Flow Mid-Cycle

This ensures continuous alignment between what’s in the contract, what’s invoiced, and what’s visible to the customer.

Why other vendors struggle with prepaid with drawdowns

Most SaaS billing systems were designed for postpaid billing (charge → invoice → payment). Prepaid drawdowns are an afterthought, leading to major challenges:

1. Manual reconciliation:
   
   • Vendors often rely on finance teams to manually adjust invoices and entitlement balances.
   • This is error-prone and doesn’t scale across multiple customers.
2. Invoices lack transparency:
   
   • Other systems show only charges and payments.
   • They do not display starting balance, consumption, and balance left clearly.
   • This leads to confusion for customers and support escalations.
3. Disconnected from usage data:
   
   • Consumption-based billing is often not tied directly to entitlements.
   • This results in either double billing (charging even when credits exist) or unused credits (wasted prepaid amounts).
4. No Real-Time View:
   
   • Balances are only updated when invoices are generated.
   • Customers and account managers have no live visibility into remaining credits.

 Zenskar vs competition

Handle prepaid with drawdowns effortlessly with Zenskar

Managing contracts with prepaid billing and drawdowns doesn’t have to be complex. With Zenskar, it becomes automated, transparent, and scalable across thousands of customers.

‍Book a demo today to see how Zenskar can simplify prepaid with drawdowns for your business.