> ## Documentation Index
> Fetch the complete documentation index at: https://docs.fincelo.app/llms.txt
> Use this file to discover all available pages before exploring further.

# Expansion Billing

> How Fincelo handles seat expansions, usage upgrades, and mid-contract changes — always presenting 3 options.

## Overview

When a customer expands — more seats, higher tier, additional modules — Fincelo never auto-pro-rates. It always presents 3 options to the CFO, each with full ASC 606 treatment shown. The CFO chooses. The choice is logged with name + timestamp.

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## The 3 Expansion Options

### Option 1 — Pro-Rated Co-Terminus

* New seats billed pro-rata from expansion date to original contract end date
* All seats renew together on the original anniversary
* ASC 606: recognise pro-rated amount over remaining term

### Option 2 — Fresh 12-Month Independent Cycle

* New seats start a fresh 12-month contract from expansion date
* Original seats and new seats renew on different dates
* ASC 606: full 12-month recognition on new seats

### Option 3 — Extended Co-Terminus

* Contract end date extended to accommodate new seats at full price
* One unified renewal date maintained
* ASC 606: blended recognition over extended term

<Info>
  All 3 options recognise the same total monthly amount — the difference is timing and renewal structure, not total revenue.
</Info>

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## Ratchet Clauses

If the contract has a ratchet clause (minimum revenue guarantee), Fincelo flags it during expansion billing:

* Contraction below the ratchet floor is blocked
* Expansion above the ratchet is calculated correctly
* AI detects ratchet language automatically during contract extraction

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## Effective Date Options

For mid-contract changes, Fincelo offers 3 effective date choices:

1. **Immediate** — change takes effect today
2. **Next billing date** — change takes effect on next invoice
3. **At renewal** — change takes effect when contract renews

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## Audit Trail

Every expansion decision is logged:

* Option chosen (1, 2, or 3)
* CFO name
* Timestamp
* ASC 606 treatment applied
* Previous contract value vs new contract value