Billing Management: #1 Billing an Universal Business Routine

Billing Management: #1 Billing an Universal Business Routine

Hello,

As the saying goes, "Do the hardest job first", we started with the complex subject in finance, revenue management, which is considered to be the backbone for any business. Now, let's shift our focus and take a deep dive into this Billing Management which is nothing harder than revenue management. In short, Billing is the practical side of how revenue actually flows in.

The main source of revenue for any business lies in the sales it makes. You may hail from any country, but selling a product or service doesn't really work without an invoice or a payment receipt. Billing is not mere a task during sales, it is a proof of value exchanged and the starting point of reliable cash flow. In this opening post, we will be looking into the common methods of billing that prevail.

 One-Time Billing 

One-Time Billing is the simplest model, where a single payment is made for a product or a service and the transaction ends there. As simple as that.

 Think of walking into an electronic store, buying a laptop, paying for it at the counter. You walk out of the store with your purchase and the deal is done.

Similarly, A freelance consultant might charge a flat fee for a two hour training session.  

Once the product is sold or a service is delivered; payment is made, nothing more is expected on either side.

This model is widely seen across industries,. In retail, every checkout is a one-time bill. In hospitality, booking a hotel room for a single night stay works the same way. You stay, you pay and the transaction closes. It's quick, clear and efficient, though it doesn't guarantee steady revenue unless the customer returns for repeated purchases.

 Project-Based Billing 

Project billing works by linking payments to the milestones or deliverables rather than charging all at once.

 A web development company designing a new website, might structure the payment in stages 20% during design, 40% during development and the remaining 40$ upon launch.

Likewise, an IT service form might bill after migrating data, again after testing and finally after deployment.  

Industries like construction and engineering rely heavily on this model. A builder might charge after completing the foundation, again after raising the structure and finally after finishing the interiors. This approach ensures the client pays as value is delivered while the service provider maintains healthy cash flow all through the project duration.

 Expense Billing 

Reimbursing the actual cost incurred on behalf of the client is all we do in expense billing.

 Imagine a law firm, for instance, might add court filing fees, travel expenses and documentation charges to its professional fees.

Also, a construction company shows the client the real cost of cement, steel or tiles in addition to labor charges.  

Expense billing is also seen in industries like consulting or advertising. An ad agency, for example, might charge its service fee separately but pass through media buying cost directly to the client. This approach keeps things fair and open. Clients know exactly what they are paying for and businesses avoid absorbing expenses that rightly belong to the project.

 Recurring/Subscription Billing: 

Recurring billing charges customers at a regular interval say weekly, monthly or annually, accounting the continuous access to a product or service.

 A Video streaming company charges your card every month and as long as you keep paying, your streaming access continues without interruption.  

But, the story changes when you upgrade mid-month to add more screens, downgrade to a cheaper plan or cancel halfway through your cycle. Should you be charged full price, half or something in between? That's where things gets interesting.

There is no universal rule in subscription billing. A gym membership works differently from a SaaS license, which again differs from an magazine subscription. The complexity even lies within the same industry type as the demand differs from one subscriber to another.

On top of that, There are other entities like trials, addons, pay-per-user, mid-cycle changes all demand unique billing logics. That's why subscription businesses often relay on API driven billing system or more automated method to manage these complexities dynamically.

Bill beyond boundaries

Each billing model serves a distinct purpose and business now-a-days are ready to take up experimenting with different billing method by blending one time with subscription based, project with subscription and so on. Hybrid billing is becoming the order of the day and businesses should choose the right tool that stays flexible, powerful and that handles complexity.

Zoho Billing is empowered to deliver all at one place. Be it one-time, project-based, expense or subscription-based, Zoho Billing is the one stop solution for all your billing requirements. It doesn't stop with just billing, it digest the complex workflow you propose and provide a complete hands-free solution through it's automated billing approach.

Do you agree? Yes?

In the next post, Let's dive in to the biggest challenge in subscription billing Prorated Billing which decides how to charge fairly when customers join, upgrade, downgrade or cancel at mid-term.

Stay Tuned! 

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