Glossary: Billing Terms | Prolifi

This page covers billing models, invoicing, and related financial terminology. For other glossary categories, see: Platform Concepts, Pricing & Subscription Terms, Payments & Integration Terms, and Reporting & Global Terms.

Billing Model

Plain-language definition: The mechanism by which a customer is charged. Prolifi supports seven distinct billing models, each suited to different commercial scenarios. The billing model determines when a charge is triggered, how the amount is calculated, and how the invoice is structured.

Technical definition: A billing model is a configuration attribute of a plan that determines invoice generation logic. The seven supported billing models are: one-off, recurring, instalment, usage-based, pay-as-you-go, pre-paid credit, and hybrid. The billing model interacts with the pricing model to produce the final invoice amount.

For a detailed comparison of all billing models, see Billing Models.

Credit Note

Plain-language definition: A document that reduces the amount a customer owes, or acknowledges that a customer has been overcharged. Credit notes can be applied to offset future invoices or trigger a refund. Common reasons for issuing a credit note include: a billing error, a subscription cancellation mid-period, or a goodwill gesture.

Technical definition: A CreditNote object in Prolifi represents a negative adjustment against a customer’s billing record. Credit notes can be: (a) applied to the next invoice as a credit balance, (b) converted to a refund back to the original payment method, or (c) left as a standing credit balance on the customer account. Credit notes are immutable once finalised and form part of the audit trail.

See also: Invoice, Refund, Proration

Deferred Revenue

Plain-language definition: Revenue that has been collected but not yet “earned” in an accounting sense. When a customer pays annually upfront, the full payment is received on day one — but from a revenue recognition standpoint, you earn one-twelfth of it each month as you deliver the service. The un-earned portion is deferred revenue. Recognising deferred revenue correctly is important for financial reporting under accounting standards.

Technical definition: The portion of a collected payment that has not yet been recognised as earned revenue under the configured recognition rules. Prolifi tracks deferred revenue through recognition schedules generated at invoice finalisation. The deferred revenue balance decreases as recognition entries are posted per period, in accordance with ASC 606 or IFRS 15 rules as configured.

Dunning

Plain-language definition: The process of attempting to recover a payment that initially failed. When a customer’s payment method is declined, Prolifi does not immediately cancel the subscription. Instead, it follows a configurable dunning sequence — retrying the payment at defined intervals, sending recovery emails to the customer, and ultimately taking a defined action (pause or cancel) if all retries are exhausted.

Technical definition: The dunning process in Prolifi is a configurable workflow triggered when a payment attempt returns a soft decline or processing failure. The dunning configuration specifies: retry interval schedule, maximum retry count, communication triggers (email per retry), and final failure action (subscription pause, cancellation, or manual review flag). Each retry attempt creates a payment event in the billing audit trail.

For guidance on configuring dunning workflows, see Dunning & Payment Recovery.

Hard Decline

Plain-language definition: A definitive payment rejection that indicates the payment cannot succeed and should not be retried. Examples include: the card number is invalid, the card has been reported stolen, or the account is closed. Unlike a soft decline, retrying a hard decline will not result in a successful payment.

Technical definition: A payment processor response code category indicating a permanent failure condition. Prolifi dunning logic excludes hard decline codes from retry sequences. When a hard decline is received, the dunning workflow terminates immediately and the configured final failure action is triggered. Common hard decline codes include: do_not_honor, pickup_card, restricted_card.

See also: Soft Decline, Dunning, Payment Retry

Hybrid Billing

Plain-language definition: A billing arrangement that combines two or more billing models within a single subscription. For example, a customer might pay a fixed monthly fee (recurring billing) plus a variable charge based on how much they use the service (usage-based billing). Hybrid billing is common in SaaS platforms that charge both a base fee and an overage.

Technical definition: A billing model configuration in which multiple billing model types are active on a single plan or subscription. Prolifi supports hybrid billing through plan-level configuration of multiple charge components, each with an independent billing model. On invoice generation, all components are combined into a single invoice with separate line items.

Instalment Payment

Plain-language definition: A billing arrangement where a total amount is split into a scheduled series of smaller payments. Instead of paying £1,200 upfront for an annual subscription, a customer might pay £100 per month for 12 months. Prolifi manages the instalment schedule and generates an invoice for each instalment automatically.

Technical definition: A billing model in which a predefined total amount is divided into a configured number of sequential payments. The instalment schedule defines: total amount, number of instalments, instalment interval (monthly, quarterly, etc.), and failure handling logic (whether a failed instalment triggers dunning or an alternative action). Each instalment generates a separate invoice.

See also: Billing Model, Invoice, Dunning

Invoice

Plain-language definition: The formal document generated by Prolifi that records what a customer owes (or has paid) for a billing period or event. Invoices are the financial record of each billing transaction and carry the line items, tax, discounts, and payment status of each charge.

Technical definition: An Invoice object in Prolifi is created by the billing engine in response to a billing trigger event (period end, subscription creation, plan change, manual creation). Invoices pass through a state machine: Draft -> Finalised -> Payment Due -> In Progress -> Paid / Not Paid / Partial. Additional states: Dispute, Void. Finalised invoices are immutable; adjustments are made through credit notes or additional invoices.

Invoice states:

State	Meaning
Pending	Invoice has been drafted but not yet finalised
Posted	Invoice has been finalised and sent to the customer
Payment Due	Payment is due and the auto-collection attempt is pending
In Progress	Payment collection is in progress (gateway request sent)
Partial Paid	A partial payment has been received against this invoice
Paid	Invoice has been fully settled
Not Paid	Payment collection has failed and dunning is exhausted
Dispute	Customer has raised a dispute against this invoice
Void	Invoice has been cancelled; no payment is expected

See also: Credit Note, Proration, Dunning, Revenue Recognition

One-Off Billing

Plain-language definition: A single, non-recurring charge. A customer pays once for a product or service and is not charged again unless they make another purchase. One-off billing is appropriate for purchases that are not subscriptions — set-up fees, one-time add-ons, or individual products.

Technical definition: A billing model in which a single invoice is generated for a defined amount without a recurrence schedule. The one-off invoice is created either immediately on order creation or deferred to a scheduled date. There is no subsequent automated billing cycle.

See also: Billing Model, Invoice, Recurring Billing

Pay-As-You-Go (PAYG)

Plain-language definition: A billing model where customers pay only for what they actually use, with no minimum commitment. Unlike usage-based billing (which typically bills at period end), PAYG systems may bill in near-real-time or against a prepaid credit balance that is consumed as usage occurs. Common in cloud computing, AI API services, and telecoms.

Technical definition: A billing model variant in which customer consumption events are translated into charges that are either: (a) deducted from a pre-loaded credit balance, or (b) accumulated and billed at the end of a defined period without a fixed subscription commitment. Prolifi supports both credit-consumption PAYG and accumulated PAYG variants.

Pre-Paid Credit Billing

Plain-language definition: A billing arrangement where a customer purchases a credit balance upfront, then draws down that balance as they use the service. When the balance runs low, they top up. This is common in AI API services, telecoms top-up models, and usage-heavy SaaS products where customers prefer cost certainty.

Technical definition: A billing model in which a CreditBalance object is established for a customer, funded by a one-off or recurring top-up payment. Usage events or service consumption events reduce the credit balance. Low-balance threshold events can trigger automated top-up invoices or customer notifications. Credit balance expiry is configurable.

Proration

Plain-language definition: The calculation of a partial period charge or credit when a subscription change happens mid-billing-period. If a customer upgrades from a lower to a higher plan halfway through the month, they should pay for only half a month at the new, higher rate (and receive credit for the unused half-month at the old rate). Prolifi calculates this automatically.

Technical definition: The mathematical adjustment applied to invoice line items when a subscription event (upgrade, downgrade, cancellation, pause) occurs before the end of a billing period. Prolifi calculates the prorated amount based on the number of days remaining in the current billing period, the day-rate of the relevant plans, and the billing anchor date. Proration produces either an additional charge (upgrade) or a credit (downgrade/cancellation) on the next invoice or as an immediate invoice.

See also: Invoice, Billing Cycle, Upgrade, Downgrade, Credit Note

Recurring Billing

Plain-language definition: A billing model in which a customer is automatically charged at regular intervals — monthly, quarterly, annually, or another configured frequency. Recurring billing is the foundation of subscription business models. Prolifi manages the entire recurring billing cycle: invoice generation, payment collection, retry on failure, and dunning.

Technical definition: A billing model that generates invoices automatically at defined intervals based on the billing cycle and anchor date. Recurring billing in Prolifi supports: flexible billing frequencies (daily, weekly, monthly, quarterly, semi-annually, annually, custom), trial periods before first charge, and configurable proration on cycle changes.

Revenue Leakage

Plain-language definition: Revenue that your business should have collected but did not, due to billing errors, failed payments that were not recovered, incorrect proration, unapplied discounts, or other operational gaps. Revenue leakage is often invisible because it shows up as the absence of revenue rather than an explicit loss.

Technical definition: The aggregate of uncollected revenue attributable to: failed payment events that exited dunning without recovery, billing calculation errors, incorrect discount application, missed usage aggregation, and reconciliation discrepancies between expected and collected amounts.

Usage-Based Billing

Plain-language definition: A billing model where the charge at the end of each period is determined by how much the customer actually used the service. Usage events are tracked throughout the billing period, aggregated at period close, and the resulting total determines the invoice amount. Common in API services, cloud infrastructure, and telecoms.

Technical definition: A billing model in which invoice amounts are calculated from usage aggregation records accumulated during a billing period. Usage events are ingested via the Prolifi usage tracking API. At billing period close, Prolifi aggregates the events (by sum, max, or other configured aggregation method) and applies the configured pricing model (per-unit, tiered, volume, etc.) to produce the billable amount. Usage-based billing requires an active usage metric configuration linked to the plan.

See also: Usage Metric, Usage Tracking, Event, Pricing Model