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Prorated Billing

Prorated billing is a fee structure that charges customers based on a percentage of usage rather than a flat fee for a given pay period. This is most common in subscription billing models and promotes flexibility, fairness and transparency for users.

While customers often prefer this billing method for variable-use services, it can introduce a high degree of complexity for businesses and their data systems across the O2C cycle.

Related terms

ASC 606
Accounting Standards Codification (ASC) 606 is a standard framework for revenue recognition developed by the Financial Accounting Standards Board (FASB) for companies operating within the United States.
Accounts Payable Automation
Accounts payable automation (AP Automation) refers to the use of technology and software solutions to streamline and optimize the accounts payable process within an organization.
Accrual Accounting
Accrual accounting is an accounting strategy that records payments and expenses when they are earned and incurred. This is different from cash accounting where revenue is recognized when it is actually deposited or transferred. 
Advanced Billing
Advanced billing refers to sophisticated billing practices or capabilities that go beyond basic billing functionalities to address complex billing scenarios, accommodate specialized pricing structures, and support advanced revenue recognition requirements.
Annual Contract Value (ACV)
Annual Contract Value (ACV) is a metric used to assess the average yearly revenue generated by a single customer contract. It helps businesses understand the annualized worth of their customer base, focusing on recurring revenue streams.
Automated Clearing House (ACH)
An Automated Clearing House (ACH) is an electronic network that facilitates the transfer of funds between bank accounts in the United States (and internationally with some variations).