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Complex Billing 101: What You Need to Know

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Complex billing is a method of invoicing companies that is not dependent solely on volume and/or time. These billing plans, packages, bundles, and discounts take a wide variety of parameters into account when calculating a total price for the customer. A combination of factors such as prior contractual agreements, group accounts, and location-based tier pricing can create a complex billing environment for firms.

Not all companies will deal with the intricacies of complex billing – consumer-facing brands often have simple pricing models that are easy to implement within a system. More frequently, businesses offering services to other businesses, commonly referred to as business to business (B2B) brands, are those taking advantage of the complex billing model. These B2B organizations oftentimes prioritize certain enterprise customers, offering them discounts and special plans to maintain brand loyalty.

There are numerous scenarios where complex billing is required but here are two real-life verticals where complex billing is made very evident. The following example business models provide the answer as to why efficient management of highly complex and variably priced service offerings is essential.

The Airport Model

Airports have several major partners that it must service equally. When considering the plethora of airlines, kiosks, shops, or regulators involved in the facility, many parties are competing for the resources of any given airport. Airports interact with these various bodies in the following ways:

Airlines are charged fees based on the airlines’ use of the airport’s facilities. These charges are generally based on the mean takeoff weight of each plane, the total number of passengers loaded and unloaded from each plane, time spent at the gate, and the volume of jet fuel purchased.  

Restaurants, kiosks, and other retailers providing services to restaurants are also charged a variety of fees for their use of the airport space. Under their lease agreement with the airport, these businesses have agreed to pay for their rent, water usage, electricity, heating, cooling, and property taxes proportionate to its physical footprint within the overall facility.

Regulators, specifically the Transportation Security Administration (TSA) for United States airports, are not charged a fee to perform their federal duties within the airport. When an American buys a plane ticket, a significant portion of that revenue goes towards funding the TSA. Airports must, however, budget resources for TSA operations within their facilities.

Due to the intricacies involved in this model, accountants for airports make educated estimates of revenue and expenses and must ‘true-up’ the actual figures against said estimates. True ups can be calculated monthly, quarterly or annually. In an optimal world, and airport should be able to do all the above with one system and not a series of spreadsheets coupled with expensive ERP integration.

The Telecommunications Service Provider Model

Communcations service providers have residential and business customers who consume a wide variety of services, typically in many different locations both domestically and abroad.

Charges for the services consumed must reflect the individual departments and locations that it was incurred by. This is why complex billing is introduced into the model. The following are examples of what the telecommunications service provider may charge its business customers based on.

  • The combination and bundling of products and services
  • The volume of usage (packets, bytes, locations)
  • Guaranteed levels of service and availability
  • Contract terms and conditions dictating how and when charges will be billed
  • Taxes levied by local and national authorities
  • Pricing tiers and discounts earned at the various volume levels
  • Online access to authorized customer personnel

In conjunction with defining these pricing plans using a mix of various parameters, complex billing also requires Product Managers who can track the profitability of the combination of your offerings. In the B2B billing landscape, every customer’s unit price will vary based on a variety of different factors. It must be possible to analyze the overall adoption of the offering by all customers, regardless of the specific pricing for each customer.

When considering businesses that utilize complex billing and pricing methods like the examples above, understanding the need for a first-class billing system becomes increasingly important. There are very few billing systems on the market able to support the entire range of scenarios for this essential business need. The Kansys Edge successfully supports a full set of complex billing and information access needs for companies in telecommunications, transportation, finance, and hospitality, among others.

What are you waiting for? Experience the Kansys Edge today.

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