Your PSA Was Not Built for NCE Renewal Dates. Set It Up Like This.

New Commerce Experience gets discussed as a licensing change, but the place it actually hurts is your PSA: renewal dates multiplying per subscription, one Microsoft SKU needing two rate plans, and a no-decrements policy that can leave you paying a distributor for seats you are no longer invoicing. This post breaks all of that down and gives concrete PSA recommendations.

It assumes a working knowledge of New Commerce. If you need the fundamentals first, start with this NCE breakdown, and see our companion piece on reducing NCE liability for the contract side.

One Microsoft SKU becomes two PSA products#

NCE raises the odds that a customer holds two subscriptions of the same product on different commitment terms, driven by the 20% premium on monthly pricing. Most MSPs we have talked to plan some split between terms for flexibility and seasonal workers. A typical breakdown:

Customer XYZ has:

• 25 seats of M365 Business Premium on an annual, paid-monthly contract
• 10 seats of M365 Business Premium on a monthly contract (paid monthly)

The key thing: both Microsoft and your distributor expose only one product ID. The 25 annual seats and the 10 monthly seats are the same SKU. So you need a separate product in your PSA per commitment term you support, to accommodate the different rate plans. A workable nomenclature:

Product Name - Term Commitment

• M365 Business Premium - Annual Paid Monthly
• M365 Business Premium - Monthly

Keep existing agreements or start fresh?#

You are probably already updating your MSA or Microsoft contracts to reduce NCE liability. As covered in the liability article, the contract terms should be black and white: the customer commits to a full year at existing rates, or pays the premium to stay monthly. On the PSA side there are two options:

• Maintain existing contracts/agreements. Pro: you do not have to manually create all new contracts.
• Create new contracts. Pro: you do not have to close-date or cancel legacy line items for old M365 SKUs when you upgrade to the NCE product line. You start fresh.

Renewal dates are the real problem#

Renewal dates under NCE are set per subscription at the time of purchase or upgrade from legacy products. A single customer can carry many renewal dates if orders do not land on the same day. Add the policy that there are no decrements or cancellations mid-term, even on monthly contracts, after the first 72 hours of a purchase or increment, and the complexity compounds.

Walk through it with the example customer above, holding Business Premium on both annual and monthly terms. In your PSA you would naturally add both subscriptions to the same agreement:

• M365 BP Annual Paid Monthly: monthly agreement/contract
• M365 BP Monthly: monthly agreement/contract

The clean case: both purchased on 2/1/22, so both share a renewal day. You can automate a PSA alert to customer contacts when the annual is 30 days from renewal, and tell the customer all monthly seat changes must be submitted before the first of the month, ahead of your next billing cycle.

The messy case: the renewals differ.

• M365 BP Annual Paid Monthly: renewal 02/01/23
• M365 BP Monthly: renewal 03/04/23

If you invoice on the first of the month, you cannot just tell the client to submit changes before the first, because seat counts cannot go down until the renewal hits (here, 3/4). Change the billable quantity in your PSA early and you create a discrepancy with the distributor: you pay more than you invoice for the 4 days where the real seat count was higher.

The workaround is ugly: bill the full March seat count on 3/1, decrement at the renewal, take the prorated credit from the distributor, and apply that credit to the April invoice so you never pay more than you bill. Multiply that across all customers and it becomes a nightmare, mostly because you have to track the exact window in which each subscription can decrement.

Two ways to keep the overhead down:

1. Upgrade or purchase NCE products on the first of the month, aligning Microsoft renewal dates with your billing cycle.
2. Create separate agreements/contracts per subscription when renewal dates differ, which also makes renewal alerts automatable.

The worst possible thing you can do with NCE is start upgrading customers' current subscriptions on random days in the month.

ConnectWise walkthroughs#

CW example: upgrading on the first of the month

Current subscriptions:

• 1 subscription of Business Premium on monthly

Moving to:

• M365 Business Premium Monthly, and
• M365 Business Premium Annual Paid Monthly

Steps:

• Create 2 products in the Product Catalog for M365 BP, one at annual rates and one at monthly.
• Upgrade the customer subscription to NCE on 2/1/22 and choose Annual Paid Monthly.
• Add a new line item to the agreement. If you write this to the customer's existing agreement, put a cancellation date on the old addition.
• Purchase M365 BP Monthly for the same customer and add it to their agreement as well.
• Add an end date on the agreement to accommodate the end of the annual term.

CW example: incrementing an NCE subscription mid-term on Annual Paid Monthly

Current subscription:

• NCE commitment term: Annual Paid Monthly
• Quantity: 26
• Purchase date: 2/1/22
• Renewal date: 2/1/23

Increment details:

• There is an existing open addition for the quantity of 26.
• On 6/15/22 you add 3 seats.
• Those 3 seats are prorated mid-month and added as a close-dated addition to the existing agreement.
• The ongoing addition is updated to 29, billed out for the remainder of the term.
• The added seats co-terminate at the 2/1/23 renewal.

Price events to put on your calendar#

Over the course of NCE there are milestones reflecting price increases and promotions. On March 1, 2022, six SKUs go up in price (details in the NCE breakdown), and two time-bound promotions are running:

• Annual terms at a 5% discount until the end of March 2022
• Monthly terms at annual rates until July 2022

When these events hit, you need to update pricing on existing agreements/contracts where applicable. Many MSPs are moving to NCE before March 1, 2022 to lock existing rates for a year and capture the 5% discount; whatever you do, set alerts so you know to update contracts when each event lands.

A practical trick: put a cancellation date on contracts/agreements for every customer who moves into an annual commitment, so the date itself reminds you to adjust prices. Do the same for customers moved to monthly, with the end date set to the end of June 2022, or set alerts to bake the 20% premium into all monthly line items at that time.

Five rules to keep your PSA sane under NCE#

1. Upgrade or purchase NCE products on the first of the month. Aligning Microsoft renewal dates with your billing dates removes most of the reconciliation pain described above.
2. Create a PSA product for every commitment term you support. Multiple PSA products per single Microsoft product, because rate plans differ between monthly and annual and customers will hold both.
3. Create separate contracts/agreements when renewal dates differ. It is the practical way to automate renewal notices per subscription.
4. Align contract end dates with promotions. If you take part in any promotion, end those contracts when the promotion ends so prices get adjusted on schedule, especially on annual commitments.
5. Close-date legacy line items when reusing existing agreements. The NCE upgrade gets a new line item; cancel or zero out the old one so the customer is not double-billed.