Challenge

Modern businesses require flexibility when defining when to issue invoices to their customers. There can be local regulations at play, but questions regarding risk mitigation or cash flow need to be considered as well.

How it works

Billing Interval and Interval Value

First of all, you have to decide the billing period a plan shall encompass. Running a B2C business you will likely want to invoice your customers monthly - or even daily. While in a B2B context, your customers might be fine with quarterly or even yearly invoices.

Billing Timing

You have defined the period, but next comes the question if you want to issue the invoice at the start or end of the billing period and if you want to have a delay.

Interval start and end

Those are your options:

• Interval Start: Issuing the invoice at the start of the billing interval. Mitigates risk, as you have an earlier chance to cut off a non-paying customer from service by revoking his license for example. Can also increase Cashflow.
  • Note: If the billing interval itself is longer than 1 month you might be required to activate our revenue recognition feature as well.
• Interval End: Issuing the invoice at the end of the billing interval. This is a popular way to invoice your customers if in addition to recurring elements if your business also contains usages. It always gives a holistic view of any given month.

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Only for recurring and one-time options

Interval Start or End only affects recurring and one-time elements. Usages and additional Line Items will always be billed at the end of the period.

Delay

You can also configure a delay. Per default, the invoicing will start at midnight UTC at the start or end of the billing period. If your business relies on usage-based billing you might want to delay the billing to ensure late usages will appear on the same document as those usages that made it in time.

Synchronization

You can also enable "synchronization" of the billing period. Using it you can configure if you want to always invoice on the first of the month/quarter/year, or if you want to always have the full period.

Example

You sell a 10€ monthly license with interval end billing and a customer signs on on the 16th of April. If synchronization is off, your customer will receive an invoice on the 16th of every month, the first on the 16th of May, then the 16th of June, etc.
If you have turned synchronization on, then the customer would receive the first invoice on the 1st of May, followed by the 1st of June, etc.

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Pro Rata calculation in case of synched plans

If you use synchronization you end up billing just part of a billing period in the first and last period of the contract. In this case Nitrobox will automatically pro rate the recurring price for those periods, so your customers don't have to pay more than the service they receive.

In the example above the customer would only have to pay 5€ for the first 15 days of april.

Find out more about how pro rata works

Enforced synchronization

Per default, a billing period always starts and ends with the contracts start and end. However you might want to print the billing period on the document and want to instead always show the full month as the billing period (even if the contract wasn't active) - enforcing the synchronization will allow you to do this.

Example

With the example above, with no enforcing the first billing period would be from the 16th of April until the 30th of April. If you enforce it, the billing period will be considered from the 1st of April to the 30th of April.

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No impact on pro rata calculation

As enforcing doesn't change the actual service your customer receives, enforcing the synchronization will not impact the pro rata calculation.

In the example above the price for April would remain at 5€.