Invoices & Management Reporting | Major Billing Functions

Invoices

Invoices contain the details of how much the customer should pay to the carrier, when the amount is due, and other information regarding the bill. Invoices usually provide a customer with detailed information regarding the source of the charge (date and location), reasons for the charge (service provided), and the amount of the charge. Figure 1 shows a sample invoice.

Figure 1: Sample Invoice

Management Reporting

Management reports provide information to finance, sales, and operations on the performance of the system. Reports can identify problems such as, silent churn, potential new services, and network congestion. Churn is the process of customers disconnecting from one telecommunications service provider. Churn can be a natural process of customer geographic relocation or to may be the result of customers selecting a new service provider in their local area. Silent churn is the process of customers disconnecting from one telecommunications service provider due to a competitor’s influence. Silent churn is usually the result of inadequate customer service or lack of competitive rate plans. Customers that are transitioning to competitor’s services will show rapid declines in usage of service.

Management reporting can also be used to discover new services. By reviewing call patterns, churn and silent churn patterns, and customer feedback, managers can determine which new services may be good candidates for their system. CDRs and network activity can also indicate areas of network congestion and corrective measures (rerouting or adding resources) can be accomplished to overcome the challenge.

Invoicing

Invoicing is the process of gathering of items to be billed (rated CDRs) that have occurred over an invoice period, adding additional charges and credits that are not related to specific calls, and preparing the information (formatting) so it may be presented to the customer in a clear way. Invoices may be delivered by mail or in other formats such as by email (e-commerce).

Processing Payments

Processing payments involves collecting assets to settle the customer’s invoices. The typical form of payments that are received from customers include checks, cash, wire transfer, credits, and credit cards. However, other payments or credits may be applied to the customers account.

Recording the payment to the customer’s account is called posting. Posting usually involves using a payment coupon that has an account number on it and posting the received amount of money to the account. In the ideal situation, the customer has provided the payment coupon with the correct amount. In other cases, the customer may have not included the payment coupon or may pay a different amount than indicated. In this case, posting of payments may result in errors such as posting to the wrong account or applying payment new invoices instead of old invoices.

Posting to the Financial System

The billing system records and groups financial details (receivables and payables) for the company. Periodically, summary information is transferred into the general journal of the company’s accounting system. This summary posting groups different types of billing charges into summary totals to be posted to different financial accounts. These types of accounts include receivables or expenses and each account is assigned a unique number (in the financial chart of accounts). For example, payments received by credit card are usually categorized differently than payments received by cash and these totals will be recorded in accounts with different account numbers.

Back End: Cycle Billing & Clearinghouse | Major Billing Functions

Back End: Cycle Billing

The back end of the billing system uses data from the updated bill pool and adds non-call related billing charges and financial adjustments. The billing system then adds fixed recurring charges (such as monthly service fees and taxes), applies payments that have been received, produces invoices, and maintains a history database for legal purposes (government regulations) and customer care systems.

Figure 1 shows the basic call-rating process. This diagram shows that a call detail record evolves as it passes through the rating process. In the first step, a rate band is determined. Then, the identification information on the CDR is used to identify a specific customer’s account (guide the record). The customer’s rate plan is discovered and the unit (usage) and fixed (per event) charging rates are gathered and calculated. The new information (rate band, call charge amount) is added to the call detail record and it is moved to the bill pool, as it is ready to be billed.

Figure 1: Back End: Cycle Billing.
Source: The Billing College

Clearinghouse

A clearinghouse is a company or association that transfers billing records and/or performs financial clearing functions between carriers that allow their customers to use each other’s networks. The clearinghouse receives, validates and accounts for telephone bills for several telephone service providers. Clearinghouses are particularly important for international billing because they convert different data record formats that may be used by some service providers and convert for the currency exchange rate.

Clearinghouses provide a variety of services including processing proprietary records (e.g. switch records) into formats understandable by the member carriers’ billing systems, validate charges from carriers with intersystem agreements, and extract unauthorized or un-billable billing records. Clearinghouses transfer messages in a standard format such as exchange message record (EMR), cellular inter-carrier billing exchange roamer (CIBER), or transferred account process (TAP) format. The EMR format is often used for billing records in traditional wired telecom networks and the CIBER and TAP formats are used for wireless networks. The records may be exchanged by magnetic tape or by other medium such as electronic transfer or CD ROM.

Clearinghouses receive billing records from companies (outcollects - sometimes called in-roamers) and submit billing records to companies (incollects - sometimes called out-roamers). Outcollects are billing records that are sent to other systems to collect for services provided to visiting customers. Incollects are billing records that are received from other systems for services provided to their customers that have used the services of other networks.

Inter-carrier billing systems must be capable of handling billing system errors. There are many events per call and the possibility exists for duplicate records or missing details in the billing records. Charges or records may be received for customers that do not exist in the local system or the inter-services (or roaming) agreement between companies may not be valid. Charges or records may be received from other companies (incollects) that have crammed or slammed bills. Cramming is the erroneous or fraudulent addition of charges for services that were not agreed to by the end customer. Slamming is the unauthorized transfer of customer’s preferred service provider to a different service provider. When errors or omissions are detected, individual CDRs or entire batches of billing records may be flagged for return to the sender and they may be tagged for further investigation.

Front-End: Call Processing | Major Billing Functions

Major Billing Functions

Billing systems can be divided into two major functions: the front-end and back-end processes. The front-end process accepts messages from a service providers’ own switches or from other telephone or billing company’s systems (called incollects), checks the validity of billing records, matches billing records to customers in a database, and provides billing details to other systems (called outcollects). The front-end process also guides billing records to specific customer accounts. Guiding uses the call detail record identification information such as the calling telephone number to match the billing record to a specific customer account.

The back-end of the billing system aggregates billing records for a specific period (billing cycle), calculates recurring charges (e.g. monthly charges) and total usage charges (minutes or quantity of usage), and produces invoices.

Front-End: Call Processing

Call processing is the steps that are typically associated with the routing and control of the call. When used as part of a billing system, call processing receives call details from various sources (event records), reformats and edits these into call detail records (CDRs), calculates call charges for each CDR, assigns a customer account to the CDR (guiding), and gets the CDR ready for billing.

In a traditional voice telephony environment, Call Processing involves the processing of call detail records in a batch mode (or at best in near real-time). There may be several call detail events and records for each call. For example, a call may be completed from a local switch, translated by an 800 number service, and routed through a long distance switch. All the call detail events are relative to billing the call. Billing and call processing can require a substantial amount of computer processing time because there may be many events for each call.

Each CDR is rated for billing to assign a charge (cost) for each call. This rating process may involve the assignment of a rating band or category first. The actual billing charges may be added or updated after the banding or rate category assignment of the call detail record. After a CDR has been rated and the actual charge for the call is calculated, the call detail record is moved into a “pool” of billing records that are ready to be invoiced (called a bill pool). A bill pool is a group of call records that have been updated by the call processing stage in a billing system to include charging rate information. The bill pool usually contains records that are ready for the final stage of bill processing.

Figure 1 shows the basic functions of the call-processing section. This diagram shows how different event sources are received by the call-processing system. These event sources may be from the network elements or from other companies that have provided services to your customers. These records are reformatted to a common CDR format and duplicate CDRs are eliminated. Identification information in each call detail record is used to guide (match) the record to an account in the customer database. The customer’s information determines the rate plan to use in charge calculation. The rating database uses rate tables, the customers selected rate plan, and possibly other information (e.g. distance, time of day) to calculate the actual charge for each call. All of the information is added to the CDR and it is either placed in the bill pool (ready for billing), or it is sent to another company to be billed if the customer identification is not part of this network’s customer database. If there are any problems with call processing, the call detail records are sent to message investigation for further analysis.

Figure 1: Call Processing.
Source:The Billing College

Rating is the process of guiding call detail records to the correct customer records (locating the customer for the event), identifying the rate plan (from rate tables), and adding this rate information to the call detail record.

Billing systems contain many databases of information. Some of the key databases hold customer information, call detail records, rate tables, and billing records that are ready to be invoiced. A customer database holds unique identification information about the customer. This includes a customer account identification number, telephone number (may be the same as the account number), authorized feature list, rate plan identifier (which rate plan the customer subscribes to), service activation dates, and other information specific to a customer or account. A rating database holds the rate plan identifier codes and charges associated with each rate plan.

It may be necessary to divide the CDR into several components parts. For example, a call from a mobile telephone may be divided into airtime, landline usage, and long distance usage.

CDRs are commonly processed using a single call rating software module. This module uses rate plan identification information found on the CDR (determined after the guiding process) to match to rate tables that allows a per unit increment rate. Rate increments can vary based on the time of day (TOD), day of week (DOW), holidays, and other factors. After the call rate has been determined, the billing system places an initial value on the call. It may be necessary to re-rate the call based on information received after initial rating was calculated. Examples of this include; usage discounts (free minutes), toll free calls (calling party pays), and calls billed using an old rate table after a customer has selected a new rate plan.