How to understand invoicing by contract?

Introduction

This article explains how invoicing works through different contract types in the Platform. It covers the three main contract types—Invoice Contract, Seller Contract, and Support Contract—and describes how billing cycles, currencies, and organizational relationships affect invoice generation. Understanding these contract structures helps Seller Admins and Distributors manage their invoicing processes effectively.

In this article:

• Understanding contract types and billing cycles
• Invoice Contract structure
• Seller Contract in Direct and Indirect Models
• Support Contract configuration

Relations between two organizations are defined by a contract. Each contract defines a Billing Cycle Day for invoices from its provider to its consumer. The billing cycle day is a number from 1 to 28 that specifies which day of the month an invoice is generated. There are three types of contracts for invoicing: Invoice Contract, Seller Contract, and Support Contract.

Understanding contract types and billing cycles

The Platform distinguishes three primary contract types that govern invoicing relationships between organizations. Each contract type serves a different purpose in the supply chain and has specific characteristics for billing cycle management and currency definition.

Invoice Contract structure

An Invoice Contract is created between a Seller and its end-Customer. The billing cycle day is the same for all Customers of a Seller, which means the Seller invoices their Customers on the same day each month. A Seller always invoices their Customer in one currency.

Seller Contract in Direct and Indirect Models

A Seller Contract is created between organizations that sell or resell Products. This contract type defines a currency that will be used for all invoices under this contract. Invoices are calculated for all contracts involved in the subscription resell structure.

Seller Contracts support two main business models:

Direct Model includes relationships between Vendor → Seller → Customer. The major difference from the Indirect Model is that there is no Distributor as part of the supply chain.

Indirect Model includes relationships between Vendor → Distributor → Seller → Customer. This model adds an additional tier with a Distributor managing relationships between Vendors and Sellers.

In the Direct Model, the Vendor establishes a Seller Contract directly with the Seller, who then creates Invoice Contracts with end-Customers. The billing cycle day and currency are defined at each contract level. All Customers receive invoices on the same day using the same currency (e.g., NOK).

In the Indirect Model, the Vendor first establishes a Seller Contract with a Distributor, who then creates Seller Contracts with multiple Sellers. Each Seller maintains Invoice Contracts with their end-Customers. The billing cycle day may differ between the Vendor-Distributor relationship and the Distributor-Seller relationship, and currencies can vary at each tier.

Support Contract configuration

A Support Contract is created between a Seller or Distributor and an organization that receives a certain percentage of the Seller's sales for one Seller Contract. A Support Contract is always assigned to a specific Seller Contract, and all fees are calculated based only on sales under that Seller Contract.

In the Support Contract model, a Seller may have Seller Contracts with multiple Vendors (Vendor A and Vendor B). A Support Contract can be linked to one specific Seller Contract (for example, the Vendor A - Seller contract). The support organization (such as Platform) receives a percentage of Customer Price for every subscription under Vendor A. The Support Contract has its own currency and billing cycle day, which may differ from the related Seller Contract. Subscriptions under other Seller Contracts (such as Vendor B) are not included in the Support Contract fee calculations.

Summary

The article explains how invoicing works through three contract types in the Platform. Invoice Contracts connect Sellers to end-Customers with unified billing cycles and currencies. Seller Contracts enable both Direct Model (Vendor-Seller-Customer) and Indirect Model (Vendor-Distributor-Seller-Customer) business structures. Support Contracts allow organizations to receive percentage-based fees from specific Seller Contracts. Understanding these contract structures helps manage invoicing processes, billing cycles, and currency configurations effectively across different organizational relationships.