Billing Cycle
A billing cycle is the recurring period for which charges are collected and invoiced – for example, monthly, quarterly, or annually – together with the date on which the invoice is created.
Billing
Explanation
The billing cycle defines:
• the period for which charges are calculated,
• the billing date on which invoices are generated,
• whether charges are billed in advance or in arrears,
• how usage within the period is aggregated.
Customers may have different billing cycles, for example aligned with their contract start date or with calendar months. Changes during a cycle often require proration.
Why It Matters
Billing cycles rarely align exactly with accounting periods. Usage that has occurred but not yet been billed at period end may require recognition of unbilled revenue, while charges billed in advance create contract liabilities. Clear rules for cut-off between billing cycles and accounting periods are essential for accurate revenue and contract balances.
Related Terms
Recurring Billing · Proration · Unbilled Revenue · SAP Convergent Invoicing
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• Subscription and Usage-Based Billing: Key Design Decisions
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