Billing Cycles and Frequency

Introduction

Billing cycles are fundamental to how subscriptions are invoiced in the Platform. This article explains how billing cycles work, how billing cycle days are determined for different subscription types, and what billing frequency options are available. Understanding these concepts will help you manage customer invoices and predict when charges will be applied.

In this article:

• Understanding Billing Cycles
• Billing Frequency Options
• Billing Period Calculation
• Billing Cycle Examples
• Changing Billing Frequency
• Special Considerations

Understanding Billing Cycles

What is a Billing Cycle?

A billing cycle determines when invoices are generated and when subscription charges are applied. Each subscription has its own billing cycle, which is defined by:

• Billing Cycle Day: The specific day of the month when the billing period starts
• Billing Period: The timeframe covered by each invoice (e.g., Jan 15 - Feb 14)
• Billing Frequency: How often the customer is billed (monthly, annual, etc.)

How Billing Cycle Day Is Determined

The billing cycle day is determined differently based on subscription type:

1. For License-Based Subscriptions: The billing cycle day is calculated from the subscription's start date. For example, if a subscription is purchased on the 12th of November, then the subscription's billing cycle day is the 12th of each month.

2. For Consumption-Based Subscriptions: These are aligned with the billing cycle of the reselling contract under which the subscription is purchased.

3. For One-Time Subscriptions: These have a one-time payment and do not have a recurring billing cycle.

4. For Add-On Subscriptions: Add-ons always get their billing cycle from the parent subscription, regardless of the add-on's start date.

Billing Frequency Options

The Platform supports several billing frequency options:

Monthly Billing

• Displayed on UI as: "Every 1 month"
• Invoices are generated each month on the billing cycle day
• Example: A subscription with monthly billing purchased on January 15 will be billed on the 15th of each subsequent month

Quarterly Billing

• Displayed on UI as: "Every 3 months"
• Invoices are generated every three months on the billing cycle day
• Example: A subscription with quarterly billing purchased on January 15 will be billed on April 15, July 15, October 15, etc.

Semi-Annual Billing

• Displayed on UI as: "Every 6 months"
• Invoices are generated every six months on the billing cycle day
• Example: A subscription with semi-annual billing purchased on January 15 will be billed on July 15, January 15, etc.

Annual Billing

• Displayed on UI as: "Every 12 months"
• Invoices are generated once per year on the billing cycle day
• Example: A subscription with annual billing purchased on January 15 will be billed on January 15 of each subsequent year

One-Time Billing

• Displayed on UI as: "One Time"
• Invoice is generated only once, on the next billing date after purchase
• No recurring charges

Free/Trial/None

• Displayed on UI as: "Free/Trial/None"
• No charges are applied; used for free services or trial periods

Billing Period Calculation

Billing periods always follow these rules:

1. Start and End Dates: The end date of a billing period is the same as the start date of the next one.

2. Inclusive Start Date: The start date of a billing period is included in the period.

3. Exclusive End Date: The end date is not included in the period.

For example, a billing period from January 15 to February 14 includes January 15 but not February 14. February 14 belongs to the next billing period.

Billing Cycle Examples

Example 1: Monthly Billing Cycle

A subscription starts on January 15 with monthly billing:

Example 2: Annual Billing Cycle

A subscription starts on March 10 with annual billing:

Example 3: Month-End Billing

For subscriptions that start on the last day of a month, the billing cycle adapts to different month lengths:

*In leap years, the end date would be February 29 **The date adjusts to the first day of the month since February doesn't have 31 days

Changing Billing Frequency

Billing frequency can be changed during the subscription lifecycle. When this happens:

1. The current billing period is closed
2. A correction is applied for the unused portion of the period
3. A new billing period starts with the new frequency
4. The billing cycle day may be updated to the day when the change was made

For details on changing billing frequency, see: Changing Billing Frequency

Special Considerations

Leap Years

For subscriptions with billing on the 29th of February:

• In non-leap years, the billing date shifts to March 1
• In leap years, the billing date remains February 29

Month End Dates

When a subscription starts on the 31st of a month and a subsequent month has fewer days:

• The billing date becomes the last day of the shorter month
• The next billing date returns to the 31st if the month has 31 days

Summary

Billing cycles in the Platform are determined by the subscription start date and type. The Billing Cycle Day defines when invoices are generated, while Billing Frequency determines how often customers are billed. Understanding how billing periods are calculated—including special considerations for month-end dates and leap years—ensures accurate invoice management. Billing frequency can be changed during a subscription's lifecycle, with appropriate corrections applied for unused portions of billing periods.

Related Articles

• Billing Concepts Overview
• Subscription Types Explained
• Changing Billing Frequency
• Proration and Corrections