Subscription invoices: maintenance, licenses, hosting

What belongs in a subscription contract?

Maintenance contract, license or hosting - the clearer the contract, the fewer arguments later. You should put the following in writing:

• The service: exactly what is included, for example "two updates per year and support by email", and what is billed separately.
• Price and interval: monthly, quarterly or yearly - and whether payment is due in advance or in arrears.
• The payment date: for example "payable by January 31 for the current year".
• Term, renewal and notice period: for example "renews automatically for one year unless canceled three months before it expires".
• Price changes: whether and how you may change the price, with how much advance notice, and what right to cancel the customer has.

If you use general terms and conditions with consumers, make sure the clauses are balanced: terms that significantly disadvantage consumers are unfair (Art. 8 Unfair Competition Act (UCA)).

Watch out with pure services

If your subscription consists mainly of services - such as IT support, consulting or maintenance billed by the hour - the rules on mandates (Auftragsrecht) may apply. In that case, either party may end the contract at any time under Art. 404 CO, even if a minimum term was agreed; damages are owed only if the termination comes "at an inopportune time". If you are planning long commitments, for example because you are making investments for the customer, have the contract reviewed.

Announcing price changes properly

During a fixed term, the agreed price generally applies. You can only raise it if the contract allows for it. A clause like this has proven effective: "Price changes will be announced in writing at least two months in advance. The customer may cancel the contract effective as of the date of the change." That keeps you flexible, and your customers feel they are treated fairly.

VAT on subscriptions

For businesses registered for VAT, subscription invoices require the same mandatory details as any other invoice (Art. 26 para. 2 VATA). The period of supply is especially important, for example "Maintenance January 1 - December 31, 2027". It shows what the customer is paying for, and it becomes crucial when VAT rates change: the new rate then applies to supplies made from the date it takes effect (Art. 115 VATA). Under the practice of the Federal Tax Administration FTA (ESTV), an annual subscription that runs past that date is then split proportionally between the old and the new rate.

If you account for VAT on the basis of agreed consideration (invoiced basis) - the standard case - it is generally the invoice date that counts. So an annual invoice for the following year issued in December belongs in the reporting period in which you issued it.

When a subscription goes unpaid

If the contract sets a fixed payment date, the customer is in default as soon as that date passes, without any dunning notice (Art. 102 para. 2 CO), and owes 5% default interest (Art. 104 CO). Even so, a friendly payment reminder is worthwhile - often the invoice has simply been overlooked.

If payment in advance has been agreed, you may withhold your service until you are paid (Art. 82 CO) - by suspending support, for example. Announce this clearly beforehand and include it in the contract. Claims for periodic payments become time-barred after five years (Art. 128 no. 1 CO); each installment has its own limitation period.

Cancellation and pausing

If a customer cancels, confirm the cancellation in writing, stating the end date. Important: no further subscription invoice may be generated after that. Sometimes a pause makes sense too, for example for a seasonal business. In that case, don't delete the subscription - deactivate it. That way, the items and history are kept, and you can reactivate it later.

How it works in Easly

In Easly, you set up a subscription once, and from then on Easly bills it on its own:

• Weekly, monthly or yearly: You choose the customer, products, quantity and interval. On the billing date, Easly creates the invoice and automatically moves the next billing date forward.
• One invoice per customer: If several of a customer's subscriptions are due on the same day, Easly combines them on one invoice. The invoice shows which subscriptions it comes from - so give your subscriptions descriptive names such as "Server maintenance, yearly".
• Send automatically or review first: For each customer, you decide whether subscription invoices go out by email right away. Otherwise, the invoice is held for you to review and add to before sending - for example with the period of supply.
• Pause instead of delete: An inactive subscription is not billed, but it keeps all its items.
• Price changes in one step: Easly lists all products used in active subscriptions. You select them and adjust their prices by a percentage. Because subscriptions always take the price from the product catalog, the new price applies from the next subscription invoice.
• Dunning included: Subscription invoices are part of the regular dunning process, with a payment reminder and a dunning notice.

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Frequently asked questions

Information as of: see above. Sources: Swiss Code of Obligations (Art. 82, 102, 104, 128 and 404 CO), Federal Act on Unfair Competition (Art. 8 UCA), Value Added Tax Act (Art. 26 and 115 VATA). This article is not a substitute for legal advice.