How to configure pay-in-advance billing with anniversary dates and pro-ration

Pay-in-advance billing with anniversary dates charges the full period subscription fee at the start of each period, on the subscription's anniversary day. It requires the plan's pay-in-advance option enabled and the subscription set to anniversary billing. Usage charges set to pay in advance bill per event, and can be prorated only under specific conditions. Billing time is set on the subscription, not the plan, so the same plan can bill either anniversary or calendar depending on how each subscription is created.

How pay-in-advance anniversary billing works

Using September 12 as an example start date: with pay in advance enabled on the plan, Lago generates an invoice that day for the full first period (September 12 to October 12) and collects payment. On October 12 the anniversary invoice covers the full next period, and so on each month. The renewal date is the same calendar day as the start date, with one exception: start dates on the 29th, 30th, or 31st bill on the last day of any shorter month, so a January 31 start bills February 28 (or 29), April 30, and so on.

For usage charges set to pay in advance, Lago creates the fee as soon as an event arrives. If the charge is invoiceable, the default, each event also generates its own invoice. If it is non-invoiceable, the fee is grouped onto the next regular invoice instead. The amount is prorated for the remaining days only when pro-ration is enabled on the charge. Otherwise the full event amount is billed.

How to configure it

The settings live in three different places, which is the most common source of confusion.

1. Plan. Set the billing interval to Monthly and enable Pay in advance so the subscription fee bills at period start rather than in arrears. Billing time is not here; that choice is made per subscription in step 3.

2. Charges. Set the timing to Pay in advance on the usage charges you want billed per event. This is not available for the volume charge model, and the metric's aggregation must support advance billing. Enable Pro-ration only if the charge uses a recurring billable metric on a standard charge model, or a weighted-sum metric. When enabled, it reduces the units billed on that event's own invoice by the remaining-time ratio. It is not a later reconciliation. For any other pay-in-advance charge, pro-ration cannot be enabled and the full event amount bills per event.

3. Subscription. Set anniversary billing when you assign the plan to the customer. Via the API, set billing_time to anniversary and subscription_at to the anchor date.

{
  "subscription": {
    "external_customer_id": "customer_123",
    "plan_code": "your_plan_code",
    "subscription_at": "2025-09-11",
    "billing_time": "anniversary"
  }
}

If customers can hold multiple concurrent subscriptions, such as multiple seats, use billable metrics rather than flat fees to consolidate usage into a single invoice per period.

This article reflects guidance drawn from customer case resolutions. It is not officially supported documentation and may not apply to all situations.