Results 1 to 16 of 16
  1. #1

    Monthly or anniversary billing? What is "better and why?

    OK, for those of you who use a billing system that allows selection of either monthly or anniversary billing... what option did you choose and why did you choose it?

    We've never used a billing system with the option before, so I'm curious to understand the pros and cons...
    Monthly = All customers are billed on the same day of every month. ie: if customer signs up on 10th, then they are pro-rated for 21 days and rebilled on the 1st of the next month. So all customers would be billed on the 1st of each month.

    Anniversary = Customer is billed on the anniversary of signup. ie: If they signup on the 10th then they are billed on the 10th of every month.
    We are eNom PLATINUM PLUS resellers!
    Sign up today for an eNom.com reseller account with lowest possible pricing.
    * We provide support and service to over 4275 happy eNom domain name and SSL certificate resellers!

  2. #2
    Join Date
    Jul 2003
    Location
    Castle Pines, CO
    Posts
    7,189
    We usually use the anniversary. Right now - the LinkPoint electronic payment gateway handles the recurring billing for us and we have nothing to worry about. A few customers ask us to be billed at the forst of the month & we usually comply.

    You might also check out: Anniversery billing or Batch billing? for other opinions as well.

    It mainly depends on what your business plan states. We started using monthly, but then as more customers come aboard, the anniversary seemed to be better suited to most.

  3. #3
    Join Date
    Mar 2004
    Location
    New Zealand
    Posts
    532

    Re: Monthly or anniversary billing? What is "better and why?

    Originally posted by mrzippy
    OK, for those of you who use a billing system that allows selection of either monthly or anniversary billing... what option did you choose and why did you choose it?

    We've never used a billing system with the option before, so I'm curious to understand the pros and cons...
    Well, with montly billing then you only have to worry about the billing & chasing up bad debts once a month, easy to keep track of but it does mean there might be a lot of boring tedious invoicing to do at the start of the month if you don't have automatic systems for that.

    With anniversery billing, it all gets spread out through the month so the workload isn't particularly large at the start (or end) of the month but it does mean that you are always issuing and chasing up unpaid invoices everyday.

  4. #4
    There's not much pros and cons to either. It's more about how your billing system works, and how your accounting team handles them.

    One of the plus of monthly billing as defined by you is that for accounting systems that does batches, it's excellent. You just have to make sure that the first payment is pro-rated, and thereafter, everyone is on the same billing date. You must remember that all of these clients are actually on prepayment. In accounting terms, this means that you cannot count it as revenue yet, but as an asset. Having it on the same date means that you don't have to track every single account, and try to lump up the batches every single month. The work is substantially more. Another plus is that you don't have to try and record or check all the time when is the next payment. It's all the same.

    As long as your system can handle it, aniversary billing gives you the benefit of not having to do prorating.
    ••• Like us on Facebook to qualify for discounts! •••
    ••• http://www.sprintserve.net •••
    ••• Offering: | Internap FCP Bandwidth! | Rebootless Kernel Updates! | Magento Optimized Hosting | Wordpress Hosting | •••
    ••• Services: | Managed Multiple Cores 64bit Servers | Server Management | •••

  5. #5
    Join Date
    Mar 2004
    Location
    New Zealand
    Posts
    532
    Originally posted by sprintserve


    As long as your system can handle it, aniversary billing gives you the benefit of not having to do prorating.
    That's not exactly complicated though... person buys 3 months in advance (say)

    $FirstInvoiceTotal = (3 - ((1/$daysInMonth) * $dayOfMonth)) * $monthlyCharge;
    $SubsequentInvoiceTotal = 3 * $monthlyCharge;

  6. #6
    Join Date
    Aug 2003
    Location
    Twin Cities Area
    Posts
    5,649
    we use the anniversary method because we assume that if people pay on the 20th, its because thats what budgets best for them.
    if you haven't considered chapter 7 bankruptcy, maybe you should.
    eliminate your debt, keep the property you want, most people qualify.
    contrary to popular belief - no attorney is necessary!

  7. #7
    Join Date
    Aug 2003
    Location
    Chesapeake, VA
    Posts
    3,381
    I think the answer as to which is best will really vary from business to business.

    For us, monthly billing on the 1st of each month works best because everything is consistent and we time our billing & NSF reminder e-mails to go out in sequence on specific intervals each month.

    We also have a system that handles the pro-rating aspect on any gateway or merchant fees that are due so that isn't an issue either.

    The customer and billing support is also more efficient for this in that everything is standardized so it avoids a lot of potential confusion.

    Lastly, by billing on say the 1st day of each month, it enables you to have a continually cashflow-positive scenario in your operating account which is always nice. Forecasting your revenues and net income can also be made a lot easier by handling it this way, in my opinion.

    However, I've heard equally valid reasons for some merchants to bill on the anniversary - either for customer convenience or because they want their cashflow to come in evenly during the month.
    CDGcommerce.com - Trusted Merchant Account Solutions since 1998
    Many thousands of successful, growing businesses benefit from our expertise every day. You can, too!
    We help merchants to eliminate gateway costs, reduce & mitigate fraud and achieve streamlined PCI compliance.
    Learn more today at http://www.cdgcommerce.com - we look forward to helping your business grow!

  8. #8
    OK, here's a question for everyone who uses anniversary billing.

    How do you handle customers who subscribe to multiple packages?

    ie: Let's say you have a customer who has one plan that renews on the 4th of every month. So on the 10th, they sign up for another plan.

    Does this mean you now have two recurring billing events for this customer that will be processed on two different days?

    I'm going to ask if modernbill is smart enough to "pro-rate" this second account/signup and automatically add it to the first one on the annivesary date, etc...
    Last edited by mrzippy; 08-31-2004 at 09:12 PM.
    We are eNom PLATINUM PLUS resellers!
    Sign up today for an eNom.com reseller account with lowest possible pricing.
    * We provide support and service to over 4275 happy eNom domain name and SSL certificate resellers!

  9. #9
    Join Date
    Jul 2003
    Location
    Castle Pines, CO
    Posts
    7,189
    Yes that is what we do. The LinkPoint gateway takes care of it for us currently.

    (Sorry, do not use ModernBill)

  10. #10
    Originally posted by coreybryant
    Yes that is what we do. The LinkPoint gateway takes care of it for us currently.

    (Sorry, do not use ModernBill)
    Sorry, but what do you do? Do you automatically pro-rate the new account or do you have two seperate transactions?
    We are eNom PLATINUM PLUS resellers!
    Sign up today for an eNom.com reseller account with lowest possible pricing.
    * We provide support and service to over 4275 happy eNom domain name and SSL certificate resellers!

  11. #11
    Join Date
    Jul 2003
    Location
    Castle Pines, CO
    Posts
    7,189
    Sorry. I was just answering the question. Yes, we now have two recurring billing events for this customer that will be processed on two different days

  12. #12
    Join Date
    Feb 2002
    Location
    Australia
    Posts
    24,027
    Originally posted by sprintserve
    . . . As long as your system can handle it, aniversary billing gives you the benefit of not having to do prorating.
    Yet any billing system worth its salt, can do that easy as.

    I'm a convert to batch billing, at the first of the mth. Just so much simpler to track cards that didn't process, over the next 7 to 14 days, than having to track different late payers, each day, throughout the month.

    All depends on your late payment tracking system though.
    WLVPN.com NetProtect owned White Label VPN provider
    Increase your hosting profits by adding VPN to your product line up

  13. #13
    Join Date
    Aug 2003
    Location
    Twin Cities Area
    Posts
    5,649
    Originally posted by mrzippy
    OK, here's a question for everyone who uses anniversary billing.

    How do you handle customers who subscribe to multiple packages?

    we ask them if they want to combine their billing and /or we give them the additional accounts free up until the due date of the other acounts
    if you haven't considered chapter 7 bankruptcy, maybe you should.
    eliminate your debt, keep the property you want, most people qualify.
    contrary to popular belief - no attorney is necessary!

  14. #14
    For us we do anniversary billing because our systems are based around the payment processors we used. Paypal and Paysystems both can do a 30 days after (or 1 month after etc) type billing. Our new system has no problems doing it either. So we are probably going to continue.
    ••• Like us on Facebook to qualify for discounts! •••
    ••• http://www.sprintserve.net •••
    ••• Offering: | Internap FCP Bandwidth! | Rebootless Kernel Updates! | Magento Optimized Hosting | Wordpress Hosting | •••
    ••• Services: | Managed Multiple Cores 64bit Servers | Server Management | •••

  15. #15
    Join Date
    Oct 2003
    Location
    Georgetown, Ontario
    Posts
    1,771
    We use monthly billing (on the 1st of each month) simply because it is much easier than chasing people around the whole month.

    We also sell dedicated servers and we get billed on the 1st for those servers, so it makes sense that we bill our customers on the first as well.
    ·· Repeat after me... ProSupport is the best... Prosupport is... ··
    ProSupport Host Support System - OUT NOW! Grab a copy yourself and see what the hype is about!
    VertiHost Inc. - We run a quality business. Do you?

  16. #16
    Originally posted by mrzippy
    I'm going to ask if modernbill is smart enough to "pro-rate" this second account/signup and automatically add it to the first one on the annivesary date, etc...
    Here is the response I just received from ModernBill:
    It creates two billing events each month. To do otherwise would require proration for only the second and subsequent packages to the anniversary of the first package. Add to this the difficulties of setting renew dates for the 29th, 30th, and 31st, you are really looking at very complex logic.

    If you are concerned about sending separate invoices too frequently, you can use anniversary billing but still send out your invoices only twice of four times per month. The due dates can be set to a specific number of days after invoice generation and Modernbill will produce a single invoice for all packages in need of billing at the time the invoice is generated.

    I hope that is helpful.
    No worries. I might the idea of batching the invoices once a week, then. That's not a bad idea...

    Or we might just do what others have suggested and just give the new account as a freebie and manually add it to the existing billing date. Customers love freebies, and it would serve to create goodwill with our customers, etc....
    We are eNom PLATINUM PLUS resellers!
    Sign up today for an eNom.com reseller account with lowest possible pricing.
    * We provide support and service to over 4275 happy eNom domain name and SSL certificate resellers!

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •