 Rental Charges − These are the charges taken from the customers on

monthly basis against the service provided. For example, your telephone
monthly charges would be $5.00 regardless you use it or not.

 Usage Charges − These are the charges taken from the customers based
on the service utilization. For example, you would be charged for all the calls
you made or data downloaded using your phone.

Billing Systems
There could be very complex charging scenarios, which would be difficult
to handle manually. There are state-of-the-art Billing Systems available
in the software market that can handle billing tasks very efficiently and
provide lots of flexibilities to service providers to offer their services with
different price structures.

Billing systems are often viewed as accounts receivable, as the billing

system assists in the collection (receipt) of money from customers.
Billing systems are also part of accounts payable (for inter-carrier
settlements), as customers often use services from other companies
such as wireless roaming, long distance, and call completion through
other networks.

Billing systems are high end, reliable, and expensive softwares, which
provide various functionalities. Here is a list of most important features
but not limited to the following −

 Rating & billing − It involves rating the products or services usage and
producing monthly bills.

 Payment processing − It involves posting of the customer's payments into

his/her account.

 Credit control and collections − It involves chasing the outstanding

payments and taking appropriate actions to collect the payments.

 Disputes and adjustments − It involves recording customer's disputes

against their bills and creating adjustment to refund the disputed amount in
order to settle the disputes.

 Pre-pay and post-pay services − It involves supporting both the pre-paid

and the post-paid customer bases.
Billing Types
When you drill down billing subject, it becomes more complicated. I
would try to cover most of the concepts later in this tutorial, but first, let
us have a broad view of the widely used billing types −

 Pre-pay Billing − A billing mechanism where customer pays in advance and

after that starts using a service. Usually, prepaid customers do not receive
any invoice and they are charged in real time by the highly available billing
systems called 'IN'(Intelligent Network).

 Post-pay Billing − This is the conventional billing, which is coming for many
years. Here, customers buy products and services and use them throughout
the month, and by end of the month, invoices are generated by the service
provider and sent those invoices to the customers to make their due
payment.

Typical Billing Process

Considering the above system architecture: → After a call is made or you
can say a usage is generated by the end customer, the mediation system
gathers usage data from the network switch and builds a call-detail
record (CDR). This CDR must contain 'A' party number and 'B' party
number, the start and the end date & times.

The CDR is then stored until it can be rated. To rate the call, the CDR is
examined to see if the call is, for example, an 800 number, a local call
that is covered by a local-area calling plan, international call or a toll call.
Information such as the time of the call was placed and city code or
country codes are used to calculate the rate for the call.

Once each call is rated, this information is stored until the invoice is run,
usually once a month. When the invoice is run, other nonusage charges,
such as discounts or monthly fees, can be applied to the bill or sometime
called invoice.

There could be a rating time discount or billing time discount, different

payments done by the customers, different adjustments given, all these
information contribute in the final invoice generation.

This information is then converted in a format, which can be printed in a

readable form. Finally, the envelope is printed, stuffed with enclosures,
and mailed to the end customer.

Billing System Requirements

A billing system should be composed of a series of independent
applications that, when run together, are referred to as the billing
system. A good billing system should provide the following major
functionalities with a depth of flexibility −

 Customer-interface Management − The billing system must be able to

handle customer-initiated contact, oversee outbound customer contact, and
manage the contact life cycle.

 Order Management − It is a basic functionality, which should be available

in a typical billing system. Billing system should be capable enough to
capture product & service order and manage the order-entry life cycle, and
oversee the order-completion life cycle.

 Sales and Marketing − A satisfactory billing system should answer

customer's query, handle commissions, provide sales support, track
 prospects, manage campaigns, analyze product performance, and acquire
multiple dwelling units.

 Rate Plans and Rating − A billing systems must manage a variety of

products and services, different rate plans associated with those products
and services and should provide flexible ways to rate usage generated by
those products and services.

 Discounting − A billing system should be capable of giving various types of

discounts on different usages and rentals.

 Invoicing − It is important that the system performs billing inquiry,

generates bills, processes deposits, performs account administration,
maintains tax and fee information, and processes financial information.

 Credit Control & Collection − A billing system should control usage and
revenue by assigning different credit classes to different customers. System
should support payment collection and applying them on different invoices.

 Multilingual Support − Multilingual support involves providing invoices and

customer care services in multiple languages.

 Multiple Currencies − Multiple currencies used in different countries can

complicate the billing system as the billing and customer care system must
be capable of recording and processing in units of multiple currencies.

 Partner revenue management − Partner revenue management are the

sharing of revenue between carriers that provide services to each other's
customers.

 Problem Handling − A billing system should also be able to manage

trouble-ticket entry, coordinate trouble-ticket closure, and track the
resolution progress of a trouble ticket.

 Performance Reporting − A satisfactory system will provide performance

reporting, ensure quality-of-service (QoS) reporting, create management
reports, and generate regulatory reports.

 Installation and Maintenance − The system should also provide workforce

scheduling and manage activities performed at the customer premises.

 Auditing & Security − A billing system should perform data audits and
integrity checks. A secure system is always desirable for an operator.

Apart from the above functionalities, a good billing system should be −

  Accelerating time-to-market for new service launches.

 Enabling convergent view of customers and products.

 Supporting cost-efficient architectural scalability.

 Enabling partner relationship management and settlement.

 Reducing total cost of ownership.

What is a Product?
A product is a logical or physical entity, which can be sold out to an end
customer by the operators. This could be a mobile phone, internet
connection, Voice call connection, VPN, Video on demand, Digital TV
connection, etc.

A product can have its monthly rental, which we call periodic charges
also. A product can be usage generating product or non-usage
generating product. A usage generating product is sometime called
event generating product and non-usage generating product is called
non-event generating product.

For example, voice call connection, which comes along with a phone
number, is a usage generating product because it generates usage
whenever end customer uses this product to make a voice call. A simple
phone set without a connection is a non-usage generating product and it
could be given to a customer based on monthly rent only. So even if, a
customer is not using it, he has to pay monthly rental.

What is a Service?
When we talk about them from marketing point of view, as such there is
no difference between products and services because most of the times,
both are used interchangeably by different billing and marketing experts.

Simply put, an operator uses its products to provide voice services to its
customers. An international call can be called a service provided using a
voice call connection. Another example could be 800 number call may or
may not be available through a particular operator, call waiting, call
forward could be said a service provided by a model of a phone set or by
an operator.
This tutorial will use Product and Service terms interchangeably.
Keeping it simple, Products are the items that customers can either buy
outright or lease. products may be −

 Real objects (a mobile phone, for example).

 Services (a call waiting service on a telephone system, for example).

 More abstract concepts (a service level agreement, for example).

Product Families
Related products can be grouped together into a product family. Multiple
levels of products are possible, so a product can be both a parent and a
child at the same time.

In addition, each product family can have more than one parent product
if required. Examples of product families are −

 Telephony services

 Cable TV

 Internet

 Leased Line

Group of Products(Packages)
Many a times, operators bundle more than one product into a single
group and sell them as complete package. There are billing systems,
which support bundling of various types of products together as a
package. It can be offered at discounted price.

Packages allow a product to be offered to a customer at a reduced price

if it is taken as part of a package. Each package can consist of any
number of products and these products can be taken from more than one
product family.

This package price plan for a product is usually different to its

comparison (that is, non-package) price plan, as this is how the company
offers a discount to the customer for buying the complete package.
However, this is not mandatory, as a product can have one of its normal
price plans assigned to it within a package.

Products Attributes
A product can have a number of attributes associated with them. Product
attributes allow information about individual product instances to be held
where the relevant information differs between types of product. For
example, a pay TV product may have an attribute recording its set-top
box number.

Further, a mobile phone product may need attributes to record the

International Mobile Subscriber Identity (IMSI) and Mobile Station
International ISDN Number (MSISDN).

Product Event Types

A product can have a number of event types associated with it. These
event types govern the events that can be generated by the product.

For example, a mobile phone product could have event types such as
voice calls and messaging services. There could be many more event
types associated with a single phone device and operator can charge end
customer for each of the event generated by the customer.

There could be different types of charges to be applied for a product and

associated services. For a given product, an operator can define one or
more of the following charges, but they are not limited to only these
charges, there could be some other type of charges depending on
country, location, and business situation −

 Product Initiation Charges − These are one-time charges, which can be

taken from the customer as a part of installation, activation, service or
initiating a connection.

 Product Periodic Charges − These are the charges, which can be applied
on monthly or bi-monthly or yearly basis as a rental of the product and
service provided.

 Product Termination Charges − These are the charges, which can be

applied on termination of the product and service.

 Product Suspension Charges − These are the charges, which can be

applied if a product is suspended because of some reason; for example, non-
payment.
  Product Suspension Periodic Charges − There could be a requirement to
charge a customer periodically even if a customer is suspended because of
some reason.

 Product Re-activation Charges − Assuming a product was suspended due

to some reason and now it needs its activation, an operator can apply re-
activation charges for this service.

 Product Usage Charges − This is most important type of charge, which

would be applied based on the usage of the service. For example, call per
minute or per second, data download per MB, etc.

All the above charges are defined (i.e., configured) in different tariff
catalogues inclusive or exclusive of applicable tax depending on
regulatory. These catalogues vary from a billing system to billing system.
Some billing systems keep all the prices in a single catalogue and some
billing systems keep usage charges separate from other charges.

These catalogues are maintained in the billing system, but they are also
made available to front end system so that different tariffs can be
applied to the customer while creating customer account.

All the prices are defined based on products and their packages as well.
There could be different combinations of products giving different prices
in different packages.

Following section would give you an idea on different concepts, which are
closely related to tariff definition −

In-Advance & In-Arrear Charges

There may be situation, when an operator would like to charge their
customers in advance for some services and at the end of every month
for some other services.

Charges taken in advance before providing the services are called in-
advance charging and charges taken after providing the services are
called in-arrear charges.

For in-arrears charging, the product charges are applied for a period up
to at least the day before the current nominal bill date (or bill request
date for non-periodic bills).

So while configuring different charges, billing system should give a

provision to configure charges in advance and it is always optional for the
operators if they want to configure a particular price in-advance or in-
arrears.

NOTE − Usage charges can not be taken in advance until they are lump-
sum because you never know how much usage a customer is going to
generate in the coming month. If they are lump-sum amount, then you
can take that amount in advance and let the customers use unlimited
services based on their requirements.

Refundable & Non-Refundable Charges

Now, let us consider a situation where an operator is charging a
customer in advance for the whole month, but customer leaves in the
middle of the month after using a service for 10 days.

If prices were configured as non-refundable, then they would not be

refunded to the customer, but if they were configured as refundable,
then they would be refunded to the customer. Second rule, if prices were
configured as pro-ratable, then they would be refunded based on pro-
ration, otherwise they would be refunded as a whole.

Charge Overriding Option

A good billing system provides an option to override base prices at the
time they are given to the customer.

For example, for a particular product base prices in the catalogue are
defined $30 per month but customer is not ready to pay $30 per month,
and based on some bargaining, he is ready to pay $25 per month. In
such a situation, customer service representative (CSR) should be able to
override defined base price $30 and add them as $25 at the time of
customer creation in the system.

Billing system should give an optional provision to the operators if a

particular price can be overridden or not and let the operators decide if
they want to override some charges at the time of sale or they are fixed
in all the situation.

Revenue Segregation by Revenue Codes

All the operators would like to know how much they have earned using a
particular product, its rental, suspension or usage, etc.

While defining different prices in the catalogue, billing system should give
a provision to associate some kind of revenue codes or keywords with
different types of charges. This helps in generating different reports
based on the codes associated with the revenue.

Tariffs Classification
An operator may define different tariffs, which can be offered to different
people having different credit classes. For example, a 5mbps data line at
a cost of $100 per month can be offered to a customer having monthly
income more than $1000/month and a 1mbps data line can be offered to
a customer having minimum monthly income $500/month.

All the billing systems give options to define different credit classes,
which can be assigned to customers based on their credit history and
income and may be based on some other parameters defined by the
operator.

All the products and services can have different tariff plans, which can be
offered to different classes of people ranging from general class to VIP
class.

Customer Types
Typically, there are following types of customers in today's telecom
market −

 Mobile Pre-Paid Customers − These are the customers, who use Mobile
services by paying their charges in advance. For example, GSM, GPRS phone
users. These customers recharge their phone based on their requirements.

 Mobile Post-Paid Customers − These are the customers, who use Mobile
services by paying their charges after every invoice they receive. For
example, GSM, GPRS phone users. These customers pay their bills on
monthly or bi-monthly basis.

What is a CDR?
An event along with all its attributes is called Call Detail Record (CDR).
A data collector in the network switch captures the usage in the form of
Call Detail Record (CDR)/Usage Detail Record (UDR). These raw
CDRs/UDRs are in turn converted by the mediation system into a format
understandable by the Billing System.

There could be different network elements controlling the services and

producing different types of CDRs; for example, for GSM telephony −
  Voice calls are captured by the MSC (Mobile Switching Centre).

 SMS traffic is captured by the SMSC.

 Data traffic is captured by the GGSN.

 MMS traffic is captured by the MMSC.

 Roaming CDRs are captured by roaming partner's switching element.

For more information on GSM, MSC, SMS, SMSC, GGSN, MMS, MMSC,
please refer to our GSM tutorials.

Rating Process
Rating Engine receives the events in the form of data records called as
Call Detail Records (CDRs) or Usage Detail Records (UDRs), which
describe the use of a product/service. A CDR is a string of data that
contains call information such as call date and time, call length, calling
party, called party, etc., which are used to rate the events.
Bill Cycles
When a customer is added into the Billing System, system assigns the
customer a predefined Bill Cycle. A bill cycle is a date on which Billing
Engine runs and produces bills for a set of customers.

If there are many customers, then they are divided into different billing
cycles. For example, a group of customers can have billing data as 1st of
every month; another can have the billing date on 15th of every month.

If a customer is assigned to run a bill on 1st of the month, this would be

called customer's nominal bill date. But because of various reasons,
many times bill run becomes delayed and actual bill gets generated on a
later date, this would be called actual bill date.

Bill Types
There could be various types of bills available for a user. Few of them
may not be supported by some Billing Systems.
S. Bill Type &Description
No.

1 Initiation bill

Normally, only requested as the first bill on an account. Includes product

charges and adjustments, but no events.

2 Periodic bill

Produced at regular intervals. Includes all periodic charges, events, and

adjustments.

3 Interim bill

An extra bill that contains charges due to events processed for the account
since the last bill. Includes all events and adjustments, but no periodic
charges.

4 Suspension bill

Sent when an account has been suspended. Includes all periodic charges,
events, and adjustments.

5 Final bill

Sent when an account has been terminated to bill all outstanding charges
that are due. Includes all periodic charges, events, and adjustments, along
with any refunds; for example, the return of a deposit.

6 Post-final bill

Sent when a terminated account has receivables outstanding after the

production of a final bill. Includes any post-termination events and
adjustments, but no periodic charges.

7 Credit note

An extra bill that contains all adjustments in the customer's favor

generated since the last bill.
8 Summary Statements

A summary statement can be produced for a customer-driven billing

hierarchy. It can summarize all the bills produced by all accounts
associated with the respective customer. Optionally, they can also
concatenate all the bills into a single statement.

Bill Suppression
There may be a situation when it is not worth to generate a bill and
better to suppress the bill. Following are such type of situations −

 Suppressing bills for accounts with zero (zero activity bills) or very little value
(small bills).

 A particular type of bill can also be suppressed if multiple bill types are
requested/scheduled at the same time and therefore preventing unnecessary
bills from being sent to the customer.

A small bill is a bill that falls between the ranges defined by the minimum
positive bill amount and the maximum negative bill amount, exceptional
bill conditions. Small valued bills are produced and then removed from
the billing process, so that they are not sent out to customers.

Discounts can be calculated either during the rating process or during the
billing process −

 Rating Time Discount − All the discounts given at the time of rating
process. These discounts can be given at usage only. An example of rating
time discount is "5% off the first hour of all international calls".

 Billing Time Discount − All the discounts given at the time of billing
process. These discounts can be given on rated usage as well as on product
& service charges. An example of billing time discount is "5% off if you
spend over $15 within a month".

Simple Discount Types

There could be infinite types of discounts given to the end customer, but
it depends on what your billing supports. Following are the simple, but
very good types of discounts, which can be offered −
Cross Product Discounts
These are the discounts where a set of products & events determine the
discounts for another set of products & events.

For example, "10 SMS free if more than $30 is spent on mobile calls".
Here mobile calls determine the discount and SMS product gets the
discounts, such type of discounts are called cross product discounts.

Tiered Discounts
These are only applicable to the portion of the set of events or money
spent that falls between the assigned discount thresholds. For example,
in the following diagram, 0% off for a spend of $0-$100 threshold or 0-
100 events threshold, 5% off for a spend of $100-$200 threshold or 100-
200 events threshold, etc.

Volume Discounts
These are the discounts based on the number of events or product
charges that a certain product generates. For example, in the following
diagram, 5% off for a spend of $100 or 100 events, etc. As seen, the
greater the spend, the more the discount.

Most discounts have a discount period associated with them, which can
be any number of days, weeks, or months. This period can be used in
three ways −

 To specify the time over which a threshold value is meant to be reached.

 To specify the frequency with which an absolute discount is meant to be

applied.

 To specify how often the highest usage is determined for discounts with
highest usage filters attached.

Discounts could be pro-rated and non-prorated based on the

requirement. If discount is pro-rated, then discount will be calculated
based on the number of days service has been under use, and in case of
non-proration discount, it will be calculated for the whole period for
which discount has been configured.

Bonus Schemes
Bonus schemes are methods of giving the customer free events, where
the number of free events is determined by the prior usage of or charge
for one or more products over a period of time (for example, the
previous year).

For example, "Take the Super deal telephony package and get $10 of
free calls for every three hours of international calls made in the previous
quarter."

There are other ways of giving customers money off, for example, giving
a more favorable price plan via a package, reducing the unit rate of a
product as the quantity taken increases.

All the operators provide their services and collect revenue from the end
customers to survive in the business. There may be two possible ways to
charge an end customer −

 In-Advance − An operator charges the customers in advance before

providing the service. This leads to less customer satisfaction, but operator is
more secure from revenue point of view.

 In-Arrears − An operator pushes himself on risk and charges the customer

at the end of every month after providing required services. This leads to
more customer satisfaction, but operator is on a risk of collecting less
revenue.

Credit Classes
The credit class defines a category of the customer and associated risk of
revenue can be taken with that customer. A credit class also defines
which collections schedule is to be applied to the customer, should its
owner fail to make the (undisputed) payments that are due.

All the Billing Systems provide facility to define various credit classes,
which can be assigned to different customers at the time of adding them
into the system. Some examples of credit classes are as follows −

 VIP Credit Class − This can be assigned to VIP customers and would have
very high value of credit limit.

 General Public Class − This is the most common credit class and would
have almost $100 or $200 credit limit.
  Segment Specific Class − These classes can be defined based on different
segments such as police, military, or bank officers, etc. Operator can define
credit limit based on their comfort.

The payments made by the customers are posted to the customers'

account. If there are any outstanding invoices, then which invoice is paid
depends on the account's accounting method. There are two types of
accounting methods −

 Balance forward accounting − Using this method, if a number of invoices

are outstanding, payments received are allocated to invoices according to
the age of the receivable, with the oldest invoice being created first.

 Open item accounting − This method allows payments to be allocated to

specific invoices. Open item accounting is particularly useful when dealing
with payments from the business customers.

Payment Methods
A customer can make payment using different payment methods that are
supported by the service provider; for example, the customer can make
payments using the payment methods such as cheque, credit card, debit
card or wire transfers, or direct cash deposit.
Automatic Payments
Billing Systems provide facility to capture credit card or debit card
information and automatic payment methods on monthly basis.

If payment method is set automatic using either credit card or debit

card, payment requests are generated automatically after every invoice
or on a given date and these requests are sent to the payment gateways
(or banks) for payment authorization.

Once all the payments are authorized, they are uploaded into the billing
system to settle down the due invoices.

What is Dispute?
A dispute is a record of a query about an amount of money on an
account. Normally, a dispute will be recorded when a customer queries
some aspect of their bill. Disputes can be raised −

 Against an invoice on an account.

 Against a particular rated event on the account. For example, if a customer

disputes a particular pay-per-view TV event due to a power cut.

Processing of Disputes
After a dispute is recorded, it would be investigated, verified in order to
either −

 Accept − If the raised dispute is valid from customer side, then the dispute
would be accepted, and would be refunded to the customer.

 Reject − If the dispute found to be not acceptable, then the dispute would
be rejected.

 Cancel − If the dispute is entered in error, then the dispute would be

canceled.

The following points should be noted for the dispute and a billing system
should support these points −

 Collections actions are not escalated while amounts have a dispute status of
pending, but the collections are aged during this period.

 Disputed events are not included in collections calculation until they are
billed. After this, the collections are aged as normal.
What is Adjustment?
An adjustment is a method of crediting or debiting an account with an
arbitrary amount of money. Adjustments can be lodged against either an
account as a whole or against a particular rated event on that account.

A Billing System allows to create different types of adjustments, which

can be used in different situations and each adjustment flows through
different stages of approval.

If a dispute is accepted, an adjustment is created to credit the account

with the disputed amount. Adjustments should not affect the balance of
an account until they are approved. Adjustments with a status of pending
approval do not affect billing or collections.

Disputes and adjustments that are made for tax inclusive accounts are
assumed to be inclusive of tax. The gross amount is entered and will be
available for output on the bill.