In order for subscriptions products to prorate, prorate needs to be enabled in the associated plan product in the catalog. To enable prorate:
Got to Catalog->plans->plan->plan product
Scroll down to the Pricing block, select the timing option from the advance setting column and click Go
Click on prorate and click save
Note: Turning it on will not update invoices for subscriptions that have already been posted. It will only affect new subscriptions moving forward.