Balance Based vs. Invoice Based Billing

The two different approaches to billing customers in the telecom industry.

Balance-based Billing vs Invoice-based Billing
Balance-based versus invoice-based billing.

Balance-based billing systems like TimelyBill typically use a customer's account balance method, while invoice-based billing systems use the specific invoice method. Hybrid approaches are also possible, combining both methods based on customer preferences or business requirements.

In the context of telecom services, the application of payments to account balances versus specific invoices plays a crucial role in shaping the billing process.

Let's delve into the telecom-specific implications:

Applying Payments to Telecom Account Balance

This method is also referred to as balance-forward billing, which is prevalent in telecom prepay models, where customers maintain a prepaid balance.

Balance forward billing involves carrying forward the remaining balance from the previous billing period to the next one. In this method, the customer is billed based on the outstanding balance from the previous billing cycle, including any new transactions or charges incurred during the current period.

  • Payments made by customers contribute to an overall account balance, representing the amount available for future service usage.
  • Charges for calls, texts, or data are deducted from this balance, ensuring real-time transparency of remaining credit.
  • Ideal for prepaid plans, this approach allows seamless usage until the prepaid balance is depleted, prompting customers to top up.
In this scenario, customers are essentially paying the previous balance along with any new charges.

Applying Payments to Specific Telecom Invoices

In telecom postpaid scenarios, payments are allocated to specific invoices reflecting service usage during a billing period.

  • Each invoice is treated as an independent transaction, and payments are applied to settle or reduce outstanding amounts tied to individual invoices.
  • Customers can allocate payments based on priorities, addressing specific invoices or portions of their telecom service consumption.
In this scenario, a customer can select a specific invoice and apply their payment amount directly to it. This method is tailored for postpaid plans and offers a detailed breakdown of charges and payments for each billing cycle.

Telecom-Specific Examples

Consider a telecom customer with outstanding invoices for voice and data services. If the customer makes a payment, there are two options to apply the funds:

  • Account Balance Method: The payment contributes to the overall customer account balance, ensuring future service usage until the balance is exhausted.
  • Invoice Method: Payments are allocated to specific invoices, addressing charges for voice or data services and providing a detailed account of how the payment settles individual telecom service usage.

In essence, the choice between these methods in the telecom industry depends on the billing model adopted – whether it's a prepaid system emphasizing account balances or a postpaid system focused on specific invoice settlements. The chosen approach significantly impacts the customer experience and billing dynamics of the telecom service provider.

See also: "Accounting vs. Billing Software"

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