Seven approaches that can deliver more accurate Billing Cycles

Summary

Billing cycles can generate invoices with incorrect charge calculations, or present their information incorrectly. Billers can proactively reduce their error rates in these areas by validating the billing data throughout the billing process using approaches such as deferred invoice extraction, intra-billing cycle validation, reviewing held invoices, rerun / release / suppression of invoices from review, QA invoice sampling, re-execution of entire billing cycles (when major problems occur), and monitoring of error processing.

Actions

For new / sensitive customers, hold and review their invoices (to find and remove errors) before distribution
Identify and hold invoices that fail validation tests to focus the effort of billing staff and allow the remaining invoices to be sent (minimising the impact to cash flow)
Identify (and then fix) all validation errors at once
Monitor errors reports to identify and reduce error trends over time
Monitor ad reduce the delays of deferred and held invoices
Document the billing cycle re-execution process for repeatability

Why validate the Billing Cycle ?

The billing cycle can miscalculate individual charges or summary totals, and incorrectly format charges on the invoice. If these errors are not tested for and caught, customers will find them instead of internal staff. Left unchecked, a large billing system can generate a high volume of erroneous invoices, a great deal of customer confusion, and considerable (bad) publicity.

Post-paid invoice amounts and presentation formats are not determined until the billing cycle is performed. Network usage will have been rated, but discounting and invoice presentation will not yet been performed. Usage will have been priced individually without confirming that the customer's invoice total falls within an appropriate range. Proactive validation of the invoice's financial totals and presentation will reduce the quantity of errors seen by customers.

Pre-paid processing differs slightly from post-paid processing since the customer's charge amounts are calculated and deducted from their pre-paid balance as they are incurred. Financial charges should still be monitored to ensure that customers are being billed at levels appropriate to their market segment and transaction history. Invoice presentation issues still exist where pre-paid charges are sent to customers via a statement.

Seven approaches that can deliver more accurate Billing Cycles are:

Deferred Extraction - Don't extract accounts that have known issues
Intra-Bill Cycle Validation - Validate the billing data as it is processed
Invoice Hold and Review - Hold some invoices for manual review
Invoice Rerun / Release / Suppress - Post-review, act upon the held invoices
QA Invoice Sampling (Partial or Comprehensive) - Manually review a sample of invoices
Re-execution of an entire Billing Cycle - If things are particularly bad, rerun the billing cycle
Process Monitoring (Reporting) - Monitor what happens and improve the process

The additional validation and assurance steps these approaches represent make it less likely that a systematic error will be missed. When new errors are identified, additional validation can be introduced to prevent reoccurrence.

The Seven Approaches

Deferred Extraction

Don't extract accounts that have known issues - Each Billing Cycle will extract accounts due to be billed. The billing cycle extraction process can be updated to defer processing on accounts with known data quality concerns, accounts whose previous billing cycle has not completed, or that are subject to other assurance processing.

Examples of situations that may result in a deferral include:

Processing of an interim invoice overlaps with regular invoice production
A data migration is in-progress on the customer's account - the customer's data may be incomplete and unsuitable for billing
The account may be one of many impacted by a processing defect, and billing will complicate the recovery process. Billing may be deferred until the processing defect has been remediated.

Intra-Bill Cycle Validation

Validate the billing data as it is processed - As the billing cycle progresses, each processing step performs additional validation on its data. If data fails one of these validation steps, a hold on the invoice is triggered and its distribution to the customer is prevented. The invoice may be held just for review, or, after any errors have been corrected, a complete re-extraction may be forced. Multiple errors may be detected and require review or correction.

Examples of errors include:

Missing reference information preventing accurate processing
Effective dates in reference tables may be misaligned
Post-migration, customer data may contain incorrect values caused by misaligned validation between the migration process and the billing cycle

Invoice Hold and Review

Hold some invoices for manual review - All the invoices in large billing system cannot be held for individual review, but criteria can be applied to select a subset. This subset of invoices is in addition to those held due to billing cycle errors.

The biller's staff can review the held invoices to confirm their presentation, pricing plan selection, and charge calculation.

Criteria for selecting invoices can include:

Review of new customers' initial invoices
Continuous review of sensitive or high-value customers (e.g. the CEO)
Customers with a recently released pricing plan
Customers previously impacted by an operational problem - a review can confirm that the problem is resolved

Invoice Rerun / Release / Suppress

Post-review, act upon the held invoices - The appropriate action ensures that invoices with errors are corrected, and invoices without issues are distributed in a timely manner. The actions performed should be monitored to ensure that invoices are processed from their held state in a timely manner. Monitoring can also identify systemic problems that when fixed will reduce the number of invoices held in the future.

The actions available for a held invoice include:

Rerun: Once data errors have been fixed, re-extract the same invoice details and recalculate the invoice. There is little point in performing a rerun without performing changes outside the billing cycle. i.e. rerunning the same processing with the same data will generate the same result.
Release: Upon review the invoice is correct and appropriately formatted. Releasing the invoice doesn't recalculate the results, it just distributes the invoice to the customer. The invoice's due date may need to be updated since the invoice may have been delayed by days or weeks.
Suppress: This action neither dispatches an invoice to the customer nor recalculates it. If the invoice contains no charges, and as a results has no amount due, there is no 'financial' purpose in sending the invoice. Other reasons (e.g. government regulation, customer expectation) may require that such an invoice is distributed. Such $0 invoices, unless sent electronically, will cost money to distribute, and may be suppressed automatically to avoid the cost of human review and distribution.
Automatically rehold an invoice - A rerun invoice is automatically held again allowing confirmation that the changes performed have worked in the intended manner.

QA Invoice Sampling (Partial or Comprehensive)

Manually review a sample of invoices - This is manual validation performed on the printed invoices' content and presentation. This sampling ensures that known formatting problems are resolved, that customer charges are calculated correctly and that, before thousands of invoices are sent to customers, there is nothing systematically wrong with the invoices.

In large billing environments (i.e. hundreds of thousands to millions of customers), it is not cost effective or beneficial to review all invoices. The quantity and method of selecting an invoice sample can vary. Some methods may need the selection criteria applied early in the billing cycle when detailed customer information is more easily available.

Sampling criteria may include:

All invoices - An initial pilot may sample all invoices post-migration. This review validates the results generated in a new system's uncertain early operations.
Post-migration - Sample recently migrated invoices
Problem-resolution - Use criteria based on which invoices or customers were impacted by a specific problem. Confirm that the problem has been fixed.
Random - Performed without specific criteria - e.g. extract one in a thousand

Re-execution of an entire Billing Cycle

If things are particularly bad, rerun the billing cycle - When errors impact an excessive number of invoices, the best solution to resolving the errors may be a re-execution of the billing cycle. Once the cause of the excessive errors has been identified and fixed, the billing cycle's re-execution will require fewer invoices be (say) held for review (due to errors). Re-executing the complete billing cycle can be a more efficient and accurate solution than targeting specific invoices.

Re-execution considerations include:

Care with financial postings - When a re-execution is performed close to an end-of-month, care must be taken to ensure financial postings are recorded in the appropriate month.
A documented re-execution process - Documentation will provide a repeatable process that learns from historical processing errors. Known operational issues to watch for can also be included in the documentation.
Change control - Documentation may require updating when new billing functionality is deployed
Consider practising the re-execution process in a test environment when it has not been performed recently in production.

Process Monitoring (Reporting)

Monitor what happens and improve the process - Collecting and reporting on the errors and delays that occur provides the raw material for process improvement.

Monitoring can highlight:

When validation thresholds are incorrect - i.e. many invoices are held for review, but few invoices contain errors.
Systemic problems that can be addressed to minimise cash flow delays and intervention costs
Delays in the review processing - A report that monitors how long invoices are held can be actioned to avoid delaying invoices. High value invoices may be targeted due to their cash flow impact. Where regulation prevents old charges from being billed to customers, invoices must be reviewed promptly to avoid revenue losses from aged charges.

Tags: Billing, Quality