Subscription Billing Glossary

Accounting Code
A unique alpha/numerical reference given to a specific revenue or customer account to facilitate the reconciliation of transactions across various systems including subscription billing management and accounting systems.

Activation Fee
A one-time fee paid for initiation of a subscription billing service.

ACV (Annual Contract Value)
Total recurring charges fees for subscription billing, ACV is an important measurement for subscription or SaaS subscription billing.

Amendment
A change made to a subscription billing contract. Amendments can include product upgrades or downgrades, number of users, payment terms, or contract terms.

APIs
Application Programming Interface (API)s is a set of programming protocols used to integrate payment processors with merchant websites for online payment processing.

Billing in Arrears
Charges for services delivered in the past.

Bill Run
Automated subscription billing based on pre-defined conditions, such as the date, specific customer data, amount of payment etc.

Booking
For subscription billing or SaaS billing, a booking an operational metric providingis the total of charges on an order, including recurring, one-time, and service fees in a given contract period.

Churn
A metric in units or dollars of customer attrition. Churn is, calculated as the number of customers who discontinue service during a specified time period, divided by the total number of customers at the start of that period.

Contract Effective Date
Date from which the subscription billing contract terms take effect. The date is used to determine when charges can be billed to the customer..

Customer Acceptance Date
Date from which the customer has accepted the delivery of the subscription or change order associated with the subscription billing.

Downgrade
Change order or amendment to an existing contract whereby the customer chooses a lower service level and is billed a lesser amount for the service.

Due Upon Receipt
Payment whereby in which payment is due immediately upon receipt of invoice.

Evergreen
A subscription that remains active until the subscriber cancels.

Invoice-to-Collect
Collection of payments from the customer, based on an invoice which includes invoice creation, collection and dispute management.

MRR (Monthly Recurring Revenue)
Calculates subscription fees based on a monthly value, not including set up, activation, or overage.

Order-to-Cash
Order-to-cash is a process in which a customer places an order, the service is provisioned, an invoice gernated and a collection made for the invoice.

Overage
Usage charges incurred when service level included in the rate plan is exceeded.

PaaS - Platform-as-a-Service
Services delivered on the internet for developing applications including testing, deploying and hosting web applications.

Quote-to-Cash
Creation of a quotation for a prospect or customer used for order management, invoicing and cash receipt.

Renewal Rate
Percentage of subscribers scheduled to expire during any one cycle who renew their subscriptions.

SaaS - Software-as-a-Service
A software delivery model in which a software is provided on a usage, duration, or frequency basis rather than as a one-time license.

SAS 70
International regulatory standard that requires formal reviews on a company’s information technology and related processes.

Sandbox
Technical environment where software or services can be tested without disruption to a production environment.

Set Up Fee
Also known as activation fees for subscription billing. One time charge.

TCV (Total Contract Value)
Total charges over the lifetime of a subscription.

Tiered pricing
Subscription billing model whereby prices are based on the incremental number of units that are purchased.

Upgrade
A change to an existing subscription billing whereby a customer chooses a higher service level.

Usage Charge
Charge associated with consumption of a given product or service, measured on the basis of time on a site, gigabytes of data, number of reports generated, or any other variable unit.

Usage Pricing
Pricing a service or item based on its consumption of a service instead of a flat rate for a time interval.

Volume Pricing
Subscription billing based on and usage charge model where pricing changes based on the total number of units that are purchased.