This page contains key billing terminology and concepts from a definition of billing software to a discussion of consolidated bill statements and types of charges

Below, we provide a Glossary of Billing Terminology with hints and advice when selecting a billing system.

Definition: Billing Software

Software which automates the process of charging customers for products and services. This may include maintaining customer records as well as the products and services that they have purchased.

Types of Billing Software for Service Providers

We have defined two broad classes of billing software:

1. Consolidation systems - gather billing events from several systems and merge the billing events to create a single invoice with all of the charges. These systems often have one or more billing periods to mark the cut off date and time for charges.

2. Real-time systems - decrement a balance as billing events occur. When the customer's balance reaches a threshold, the billing system may terminate the customer's ability to use the service. Frequently these systems are used for prepaid or time-based services.

Parallels Business Automation is a consolidator which combines charges from multiple systems onto a single invoice. Parallels Business Automation's open API allows service providers to add new interfaces and automate more processes as required. Parallels Business Automation provides the ability to terminate all customer services if a customer's balance has not been paid in a pre-defined amount of time.

Types of Charges

Flexible billing systems can manage a variety of recurring and non-recurring charges.

• Recurring charge - a fee paid over the length of a term period which often applies to ongoing services. A recurring charge is part of a subscription which may include one-time setup costs and renewal costs at the end of the term length.
• Non-recurring charge - a one time fee paid which often applies to the delivery of products or services.
• Credits and adjustments - a billing adjustment may be initiated by a customer or automatically applied as the result of a promotion. Several reasons for making an adjustment include: goodwill, promotions, or invalid charges.

Additionally, each charge may have associated taxes. These taxes are based on the tax zone of the customer, the originating point of the service, and the tax zone of the service provider.

Alphabetized Glossary of Billing Software Terminology

Billing Cycle and Billing Period:
The billing period is a fixed amount of time between invoices. During the billing period, a customer may accrue several charges which are totaled and presented on a single invoice. The billing cycle is the time of the month or time of the year when the billing period begins. Your billing system should allow you to select different cycles for different users in order to spread the work of invoicing and customer service evenly over the month or year.

Consolidated / Unified Billing:
The process of delivering all charges from several disparate systems on a single bill. Consolidated billing is an important driver of customer satisfaction and a key factor in reducing operations costs. Billing platforms with a robust API allow you to merge information from several sources onto a single bill. Part of the challenge involves managing different types of account identifiers to ensure that a customer referenced by a social security number on one system can be matched to records where the customer is referenced by account number or address.

E-commerce:
Electronic commerce systems may be real-time or batched. Real-time systems require complex fraud analysis systems to prevent the unauthorized use of service by criminals with fraudulent payment mechanisms. Batch systems queue a number of orders for manual approval or batch submission.

Grandfathering:
Pricing and service plan changes are a necessary part of marketing plans and service delivery. Each time you want to change a plan with existing customers, you need to decide whether to allow existing customers to be "grandfathered". This means that the customers will be able to keep their existing plan and price forever - or until the next contract renewal period. Customers who are not grandfathered are immediately switched to the new rates.

Hold and Release Funds:
Customer service personnel may be authorized to enter credits up to a certain amount. Above this amount, the credit memos will be put into a hold status so that they can be approved. This approval process ensures that customer service does not accidentally or maliciously post a an incorrect or excessive credit to a customer's account.

Invoices and Payments:
At the end of a billing period, the billing software creates an invoice which will be delivered to the customer. (Parallels Business Automation allows you to deliver the invoice via text, html, or paper mail) This invoice indicates that the buyer must pay the seller the agreed amount of money.

Automated payments are often made through a banking system which can be linked to the billing system via a payment gateway. Manual payments, such as those received by check or cash, can be entered directly into the system. Most billing procedures require approval of payments by somebody other than the person who entered the payment record.

Reseller Plans:
A robust billing system should support several types of reseller plans. Multi-tiered reseller plans can support several layers of resellers. Each reseller has visibility into the resellers and end-users accounts which fall below it on the hierarchy. A listing of four common plans is provided below:

• Referral Programs - Sales agents sell existing services and collect a commission amount. The commission amount depends upon the volume of sales.
• Unbranded Resale - The reseller sets prices, but maintains service provider branding and plans.
• Private Label Resale - The reseller re-brands service offerings defined by the service provider. The re-branding of services may involve switching logos or it might be as complex as using different payment gateways, customer support, and back-office support processes.
• Flexible Resale - Resellers can create unique service plans and apply a unique brand. The reseller utilizes the service provider's infrastructure, but has a completely separate face to the customer.

White Labeling:
A type of reseller arrangement where the reseller contracts with the service provider to deliver a fixed set of services to a particular area or market. Under a white-label arrangement, the reseller can establish unique pricing - provided the resellers rates are higher than the wholesale rates offered by the underlying service provider. White label services may be either branded or unbranded, depending upon the agreement with the service provider. See resale plans for more details.

Workflow:
Workflow involves processing orders that are placed directly with the billing system. In this scenario the billing system acts as a hub for fraud screening, order processing, and order fulfillment. For this reason, the billing system is often referred to a business support system since many business processes must be managed by the system which prepares invoices and collects payments.