Note 45: Bill Generation

Posted: 02 March 2008

Rationale

Bill generation produces a bill's content from the biller's stored customer information and details of the customer's network access and use. It can also include marketing and regulatory messages the biller would like to or must pass on to the customer. With intentionally fewer opportunities for human contact between the biller and its customers, the bill is a cost-effective way that targeted messages can be distributed.

The bill must provide enough information to explain what charges are being levied and how they were calculated. The biller's customers expect the bill's presentation and detail to align with the marketing that first induced them to use the biller's network, or sign-up to their contract with the biller.

Alternative Billing Arrangements

Where a customer's consumption is easily obtained from the billing system's databases, an additional alternative to scheduled billing is 'Billing on Demand' whose timing is driven by the customer. Billing on demand allows the customer to request that their bill, including all regular details, be produced immediately (while they wait, often online). The customer can then view the bill's details, including any applicable taxation and discounting. Billing on demand may be used in a 'draft' mode by the customer (or biller's staff) to assess what their next bill total might be, or it can be used to immediately turn unbilled charges into collectable debt.

Billers may use their billing expertise to sell 'billing services' to their wholesale customers or other service providers. In this circumstance the biller performs all the billing 'on behalf' of another party. When the biller is 'Billing on Behalf of' a third party organisation, the billing processes are dependent on the third party supplying customer and charge details (where not provided solely by the biller). If the third party's customer details are stored in the biller's databases and the external charges are known, the timing of the third party's billing may be performed by the biller at their discretion. Waiting for external dependencies can complicate and extend this form of the billing process.

Prepaid versus Post-paid Billing

Most post-paid billers produce bills that are physically sent to their customers. Apart from any regulatory requirement, this is done because most customers have an expectation that before they are asked for payment the biller will provide some justification for the amount requested.

For regular, fixed amount billing (e.g. monthly cable TV subscriptions), a bill may be sent less frequently than payments are required. A yearly bill may describe the amounts and planned payment schedule, with payments deducted each month from a credit card or direct debited from a bank account.

To reduce their operating costs, some prepaid billers do not offer their customer printed bills (e.g. mobile phone operators). To avoid the paper and postal costs of physical distribution, customers' transactions may be made available online where they can be printed by the customer if required.

Bill Types

Post-paid billers produce a variety of bill types to address the different circumstances that occur over the biller's long-term relationship with the customer. Bill types produced include:

Initial: When a new customer relationship is established, a bill may be sent to collect the first billing period's charges. Recurring charges billed in advance and any installation / setup charges are included in this bill. Information the biller supplies to new customer can be included with this bill type and omitted from the other types produced by the biller.

An initial bill allows the biller to test the customer's payment ability quickly, limiting the biller's financial risk. If the customer's debt remains unpaid, the biller can terminate the customer's network access.

Regular: These are the scheduled bills sent regularly to ongoing customers. These bills include all recurring, non-recurring and usage charges, and, for a customer in good standing, will continue indefinitely into the future. Only when a customer leaves the biller's network, or the biller terminates their access, is a final bill generated.

The biller may send regular bills with different frequencies to different segments of their customer base, but the processing outlined in these notes will be similar for all of them. A biller's initial bill to the customer may not differ from their regular bill in content or format, but instead be produced soon after the customer's new connection.

Information only: As they generate their regular customer bills, billers can produce information only bills that do not demand payment. These bills are sent to additional recipients on behalf of the primary customer, and may contain subsets of the regular bill's information or be presented in different formats. Possible recipients can include the customer's accountant, a corporation's branch offices, the customer's account manager within the biller, or the divisions within a larger corporate customer.

These 'information only' bills can be thought of as 'reports' on what as been billed rather than the 'official' regular bill that, as a financial document, demands payment for services and products rendered. This approach allows many parties related to a customer to receive consistent information (generated at the same time from the same data), in a timely manner (sent at the same time as the regular bill), and in a suitable format (content selected by criteria and presented in a defined manner). Billers may choose to charge customers for this additional service.

Interim: An interim bill is triggered by the biller, or occasionally the customer, between the customer's regular bills to turn unbilled charges into collectable debt. Customers may request interim bills to generate documented expenses claimable from their employer. Business customers may wish expenses to fall within a specific tax period. The biller may initiate an interim bill if they assess the customer's unbilled charges as an excessive financial risk.

Interim bills are triggered by the value of the customer's variable charges rather than their stable recurring charges. For this reason, interim bills often extract and bill only non-recurring and usage charges. Recurring charges, especially those billed in advance, are left to the customer's regular bill.

Final: When a customer's relationship with the biller ends, a final reckoning is made of the amounts still owing. These bills occur when the customer ends the relationship, and also when the biller terminates the relationship (e.g. due to non-payment). Recurring charges are pro-rated to the final date and any early termination charges are levied (e.g. due to a customer's fixed-period contract). A final bill's timing is related to when the relationship ends rather than the customer's billing schedule.

Final bills may be in credit if the rebate on amounts paid in advance exceeds the customer's final charges. In this case the biller must pay the customer the amount owed rather than expect a final payment.

Additional Final: Charges delayed in the network or held in error processing can be passed to billing after the final bill has been generated. The biller may generate an additional final bill to recover these charges from the customer. The biller may choose to send additional final bills only when the amount exceeds a minimum threshold since the processing and distribution (postal) costs may exceed the charges' value.

This generates some tension between sending a final bill quickly whilst the contact details of a potentially relocating customer are still valid and the desire to send only one final bill. Delaying the final bill can increase the risk of bad debt due to the customer becoming uncontactable and not paying their final (outstanding) debt. Billers must decide when a final bill's processing can commence so that it is likely to contain all of the customer's remaining charges. This delay will be related to the latency between when a network transaction occurs and when it is loaded into billing.

Tags: Billing, Bill Generation, Pre-paid, Postpaid