Cycle billing - What is cycle billing?
Cycle billing is the process of issuing invoices to different customers on a schedule, rather than all at once on the same date.
Do you issue recurring invoices to your customers? Check out our blog on a new way to invoice: recurring invoices.
This approach to billing helps lower the volume of billing work and invoices that need to be issued each day. It also allows businesses to easily track which clients have and have not been billed in each billing cycle.
Another benefit to using a cycle billing method is that your business will have a more consistent cash flow, depending on what method you use.
Methods of cycle billing
Cycle billing refers to any method of issuing invoices to customers on a rotating schedule. Some of the most common methods are:
Alphabetical: You can issue invoices by the customers last name. If the customers last name begins with A through C, they will be billed on the first day of the month. If the customers last name begins with D through F, they will be billed on the second day of the month, and so on.
By amount: Customers with the highest invoice totals will be billed on the first day of the month. Customers with the second-highest invoice totals will be billed on the second day of the month, and so on.
By account opening date: Customers will be billed on the same day of each month based on the date they first opened their account.
Examples of cycle billing
Many companies use this method of issuing invoices, especially if they offer recurring services or subscriptions.
For example, with invoicing software, like Debitoor, you sign up for a monthly or yearly subscription, and they bill you on the same day of each month based on the date of the first payment.
With your phone or internet plan, they will bill you either on the same day of each month or after a certain amount of days have passed, usually every 28-30 days from the last payment.
If you have ever used long-term services from a freelancer or small business, they may have their own method of billing to ensure a steady cash flow. They may choose a specific day of the month for each client to be billed.
Cycle billing with invoicing software
With Debitoor, you can easily create recurring invoices with custom schedules to suit your needs.
Once a recurring invoice is set up, you don’t have to do anything. The system will automatically create and send the invoice to the customer on the desired date. You can also choose to have the system automatically create a draft, and then you can check and send the invoice manually.
On the software, you can select your schedule, and choose between weekly, monthly, quarterly, or yearly invoices, and even create a custom schedule.
Feel free to test it out and create your first invoice in under a minute with our 7-day trial.