---
name: billing-automation-7e3d53c9dd66
description: Automated billing systems for SaaS subscription management, invoicing, and payment recovery. Use when implementing recurring billing, automating invoice generation, or handling failed payment dunning. Covers proration calculations, billing cycle management, usage-based billing, and tax compliance (VAT/GST).
---
# Billing Automation
Master automated billing systems including recurring billing, invoice generation, dunning management, proration, and tax calculation.
## When to Use This Skill
- Implementing SaaS subscription billing
- Automating invoice generation and delivery
- Managing failed payment recovery (dunning)
- Calculating prorated charges for plan changes
- Handling sales tax, VAT, and GST
- Processing usage-based billing
- Managing billing cycles and renewals
## Core Concepts
### 1. Billing Cycles
**Common Intervals:**
- Monthly (most common for SaaS)
- Annual (discounted long-term)
- Quarterly
- Weekly
- Custom (usage-based, per-seat)
### 2. Subscription States
```
trial → active → past_due → canceled
→ paused → resumed
```
### 3. Dunning Management
Automated process to recover failed payments through:
- Retry schedules
- Customer notifications
- Grace periods
- Account restrictions
### 4. Proration
Adjusting charges when:
- Upgrading/downgrading mid-cycle
- Adding/removing seats
- Changing billing frequency
## Quick Start
```python
from billing import BillingEngine, Subscription
# Initialize billing engine
billing = BillingEngine()
# Create subscription
subscription = billing.create_subscription(
customer_id="cus_123",
plan_id="plan_pro_monthly",
billing_cycle_anchor=datetime.now(),
trial_days=14
)
# Process billing cycle
billing.process_billing_cycle(subscription.id)
```
## Subscription Lifecycle Management
```python
from datetime import datetime, timedelta
from enum import Enum
class SubscriptionStatus(Enum):
TRIAL = "trial"
ACTIVE = "active"
PAST_DUE = "past_due"
CANCELED = "canceled"
PAUSED = "paused"
class Subscription:
def __init__(self, customer_id, plan, billing_cycle_day=None):
self.id = generate_id()
self.customer_id = customer_id
self.plan = plan
self.status = SubscriptionStatus.TRIAL
self.current_period_start = datetime.now()
self.current_period_end = self.current_period_start + timedelta(days=plan.trial_days or 30)
self.billing_cycle_day = billing_cycle_day or self.current_period_start.day
self.trial_end = datetime.now() + timedelta(days=plan.trial_days) if plan.trial_days else None
def start_trial(self, trial_days):
"""Start trial period."""
self.status = SubscriptionStatus.TRIAL
self.trial_end = datetime.now() + timedelta(days=trial_days)
self.current_period_end = self.trial_end
def activate(self):
"""Activate subscription after trial or immediately."""
self.status = SubscriptionStatus.ACTIVE
self.current_period_start = datetime.now()
self.current_period_end = self.calculate_next_billing_date()
def mark_past_due(self):
"""Mark subscription as past due after failed payment."""
self.status = SubscriptionStatus.PAST_DUE
# Trigger dunning workflow
def cancel(self, at_period_end=True):
"""Cancel subscription."""
if at_period_end:
self.cancel_at_period_end = True
# Will cancel when current period ends
else:
self.status = SubscriptionStatus.CANCELED
self.canceled_at = datetime.now()
def calculate_next_billing_date(self):
"""Calculate next billing date based on interval."""
if self.plan.interval == 'month':
return self.current_period_start + timedelta(days=30)
elif self.plan.interval == 'year':
return self.current_period_start + timedelta(days=365)
elif self.plan.interval == 'week':
return self.current_period_start + timedelta(days=7)
```
## Billing Cycle Processing
```python
class BillingEngine:
def process_billing_cycle(self, subscription_id):
"""Process billing for a subscription."""
subscription = self.get_subscription(subscription_id)
# Check if billing is due
if datetime.now() < subscription.current_period_end:
return
# Generate invoice
invoice = self.generate_invoice(subscription)
# Attempt payment
payment_result = self.charge_customer(
subscription.customer_id,
invoice.total
)
if payment_result.success:
# Payment successful
invoice.mark_paid()
subscription.advance_billing_period()
self.send_invoice(invoice)
else:
# Payment failed
subscription.mark_past_due()
self.start_dunning_process(subscription, invoice)
def generate_invoice(self, subscription):
"""Generate invoice for billing period."""
invoice = Invoice(
customer_id=subscription.customer_id,
subscription_id=subscription.id,
period_start=subscription.current_period_start,
period_end=subscription.current_period_end
)
# Add subscription line item
invoice.add_line_item(
description=subscription.plan.name,
amount=subscription.plan.amount,
quantity=subscription.quantity or 1
)
# Add usage-based charges if applicable
if subscription.has_usage_billing:
usage_charges = self.calculate_usage_charges(subscription)
invoice.add_line_item(
description="Usage charges",
amount=usage_charges
)
# Calculate tax
tax = self.calculate_tax(invoice.subtotal, subscription.customer)
invoice.tax = tax
invoice.finalize()
return invoice
def charge_customer(self, customer_id, amount):
"""Charge customer using saved payment method."""
customer = self.get_customer(customer_id)
try:
# Charge using payment processor
charge = stripe.Charge.create(
customer=customer.stripe_id,
amount=int(amount * 100), # Convert to cents
currency='usd'
)
return PaymentResult(success=True, transaction_id=charge.id)
except stripe.error.CardError as e:
return PaymentResult(success=False, error=str(e))
```
## Dunning Management
```python
class DunningManager:
"""Manage failed payment recovery."""
def __init__(self):
self.retry_schedule = [
{'days': 3, 'email_template': 'payment_failed_first'},
{'days': 7, 'email_template': 'payment_failed_reminder'},
{'days': 14, 'email_template': 'payment_failed_final'}
]
def start_dunning_process(self, subscription, invoice):
"""Start dunning process for failed payment."""
dunning_attempt = DunningAttempt(
subscription_id=subscription.id,
invoice_id=invoice.id,
attempt_number=1,
next_retry=datetime.now() + timedelta(days=3)
)
# Send initial failure notification
self.send_dunning_email(subscription, 'payment_failed_first')
# Schedule retries
self.schedule_retries(dunning_attempt)
def retry_payment(self, dunning_attempt):
"""Retry failed payment."""
subscription = self.get_subscription(dunning_attempt.subscription_id)
invoice = self.get_invoice(dunning_attempt.invoice_id)
# Attempt payment again
result = self.charge_customer(subscription.customer_id, invoice.total)
if result.success:
# Payment succeeded
invoice.mark_paid()
subscription.status = SubscriptionStatus.ACTIVE
self.send_dunning_email(subscription, 'payment_recovered')
dunning_attempt.mark_resolved()
else:
# Still failing
dunning_attempt.attempt_number += 1
if dunning_attempt.attempt_number < len(self.retry_schedule):
# Schedule next retry
next_retry_config = self.retry_schedule[dunning_attempt.attempt_number]
dunning_attempt.next_retry = datetime.now() + timedelta(days=next_retry_config['days'])
self.send_dunning_email(subscription, next_retry_config['email_template'])
else:
# Exhausted retries, cancel subscription
subscription.cancel(at_period_end=False)
self.send_dunning_email(subscription, 'subscription_canceled')
def send_dunning_email(self, subscription, template):
"""Send dunning notification to customer."""
customer = self.get_customer(subscription.customer_id)
email_content = self.render_template(template, {
'customer_name': customer.name,
'amount_due': subscription.plan.amount,
'update_payment_url': f"https://app.example.com/billing"
})
send_email(
to=customer.email,
subject=email_content['subject'],
body=email_content['body']
)
```
## Proration
```python
class ProrationCalculator:
"""Calculate prorated charges for plan changes."""
@staticmethod
def calculate_proration(old_plan, new_plan, period_start, period_end, change_date):
"""Calculate proration for plan change."""
# Days in current period
total_days = (period_end - period_start).days
# Days used on old plan
days_used = (change_date - period_start).days
# Days remaining on new plan
days_remaining = (period_end - change_date).days
# Calculate prorated amounts
unused_amount = (old_plan.amount / total_days) * days_remaining
new_plan_amount = (new_plan.amount / total_days) * days_remaining
# Net charge/credit
proration = new_plan_amount - unused_amount
return {
'old_plan_credit': -unused_amount,
'new_plan_charge': new_plan_amount,
'net_proration': proration,
'days_used': days_used,
'days_remaining': days_remaining
}
@staticmethod
def calculate_seat_proration(current_seats, new_seats, price_per_seat, period_start, period_end, change_date):
"""Calculate proration for seat changes."""
total_days = (period_end - period_start).days
days_remaining = (period_end - change_date).days
# Additional seats charge
additional_seats = new_seats - current_seats
prorated_amount = (additional_seats * price_per_seat / total_days) * days_remaining
return {
'additional_seats': additional_seats,
'prorated_charge': max(0, prorated_amount), # No refund for removing seats mid-cycle
'effective_date': change_date
}
```
## Tax Calculation
```python
class TaxCalculator:
"""Calculate sales tax, VAT, GST."""
def __init__(self):
# Tax rates by region
self.tax_rates = {
'US_CA': 0.0725, # California sales tax
'US_NY': 0.04, # New York sales tax
'GB': 0.20, # UK VAT
'DE': 0.19, # Germany VAT
'FR': 0.20, # France VAT
'AU': 0.10, # Australia GST
}
def calculate_tax(self, amount, customer):
"""Calculate applicable tax."""
# Determine tax jurisdiction
jurisdiction = self.get_tax_jurisdiction(customer)
if not jurisdiction:
return 0
# Get tax rate
tax_rate = self.tax_rates.get(jurisdiction, 0)
# Calculate tax
tax = amount * tax_rate
return {
'tax_amount': tax,
'tax_rate': tax_rate,
'jurisdiction': jurisdiction,
'tax_type': self.get_tax_type(jurisdiction)
}
def get_tax_jurisdiction(self, customer):
"""Determine tax jurisdiction based on customer location."""
if customer.country == 'US':
# US: Tax based on customer state
return f"US_{customer.state}"
elif customer.country in ['GB', 'DE', 'FR']:
# EU: VAT
return customer.country
elif customer.country == 'AU':
# Australia: GST
return 'AU'
else:
return None
def get_tax_type(self, jurisdiction):
"""Get type of tax for jurisdiction."""
if jurisdiction.startswith('US_'):
return 'Sales Tax'
elif jurisdiction in ['GB', 'DE', 'FR']:
return 'VAT'
elif jurisdiction == 'AU':
return 'GST'
return 'Tax'
def validate_vat_number(self, vat_number, country):
"""Validate EU VAT number."""
# Use VIES API for validation
# Returns True if valid, False otherwise
pass
```
## Invoice Generation
```python
class Invoice:
def __init__(self, customer_id, subscription_id=None):
self.id = generate_invoice_number()
self.customer_id = customer_id
self.subscription_id = subscription_id
self.status = 'draft'
self.line_items = []
self.subtotal = 0
self.tax = 0
self.total = 0
self.created_at = datetime.now()
def add_line_item(self, description, amount, quantity=1):
"""Add line item to invoice."""
line_item = {
'description': description,
'unit_amount': amount,
'quantity': quantity,
'total': amount * quantity
}
self.line_items.append(line_item)
self.subtotal += line_item['total']
def finalize(self):
"""Finalize invoice and calculate total."""
self.total = self.subtotal + self.tax
self.status = 'open'
self.finalized_at = datetime.now()
def mark_paid(self):
"""Mark invoice as paid."""
self.status = 'paid'
self.paid_at = datetime.now()
def to_pdf(self):
"""Generate PDF invoice."""
from reportlab.pdfgen import canvas
# Generate PDF
# Include: company info, customer info, line items, tax, total
pass
def to_html(self):
"""Generate HTML invoice."""
template = """
Invoice #{invoice_number}
Invoice #{invoice_number}
Date: {date}
Bill To:
{customer_name}
{customer_address}
| Description | Quantity | Amount |
|---|
{line_items}
Subtotal: ${subtotal}
Tax: ${tax}
Total: ${total}
"""
return template.format(
invoice_number=self.id,
date=self.created_at.strftime('%Y-%m-%d'),
customer_name=self.customer.name,
customer_address=self.customer.address,
line_items=self.render_line_items(),
subtotal=self.subtotal,
tax=self.tax,
total=self.total
)
```
## Usage-Based Billing
```python
class UsageBillingEngine:
"""Track and bill for usage."""
def track_usage(self, customer_id, metric, quantity):
"""Track usage event."""
UsageRecord.create(
customer_id=customer_id,
metric=metric,
quantity=quantity,
timestamp=datetime.now()
)
def calculate_usage_charges(self, subscription, period_start, period_end):
"""Calculate charges for usage in billing period."""
usage_records = UsageRecord.get_for_period(
subscription.customer_id,
period_start,
period_end
)
total_usage = sum(record.quantity for record in usage_records)
# Tiered pricing
if subscription.plan.pricing_model == 'tiered':
charge = self.calculate_tiered_pricing(total_usage, subscription.plan.tiers)
# Per-unit pricing
elif subscription.plan.pricing_model == 'per_unit':
charge = total_usage * subscription.plan.unit_price
# Volume pricing
elif subscription.plan.pricing_model == 'volume':
charge = self.calculate_volume_pricing(total_usage, subscription.plan.tiers)
return charge
def calculate_tiered_pricing(self, total_usage, tiers):
"""Calculate cost using tiered pricing."""
charge = 0
remaining = total_usage
for tier in sorted(tiers, key=lambda x: x['up_to']):
tier_usage = min(remaining, tier['up_to'] - tier['from'])
charge += tier_usage * tier['unit_price']
remaining -= tier_usage
if remaining <= 0:
break
return charge
```
## Best Practices
1. **Automate Everything**: Minimize manual intervention
2. **Clear Communication**: Notify customers of billing events
3. **Flexible Retry Logic**: Balance recovery with customer experience
4. **Accurate Proration**: Fair calculation for plan changes
5. **Tax Compliance**: Calculate correct tax for jurisdiction
6. **Audit Trail**: Log all billing events
7. **Graceful Degradation**: Handle edge cases without breaking
## Common Pitfalls
- **Incorrect Proration**: Not accounting for partial periods
- **Missing Tax**: Forgetting to add tax to invoices
- **Aggressive Dunning**: Canceling too quickly
- **No Notifications**: Not informing customers of failures
- **Hardcoded Cycles**: Not supporting custom billing dates
---
Source attribution: David-Li0406
Original project: https://github.com/David-Li0406/meta-skill-evloving/blob/ca3a335628981df10c36e00cb9850df2c247ab9a/skill-flow/data/skills-refined-36k/skillsmp/billing-automation/SKILL.md
License: Apache-2.0
License information: https://www.apache.org/licenses/LICENSE-2.0
Original upstream instructions; downloaded from Mega AI Hub.
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# Mega AI Hub resource metadata
Creator / publisher: David-Li0406
Original project: https://github.com/David-Li0406/meta-skill-evloving/blob/ca3a335628981df10c36e00cb9850df2c247ab9a/skill-flow/data/skills-refined-36k/skillsmp/billing-automation/SKILL.md
Attribution basis: Source repository record
Fields of work: Finance & Accounting, Sales
Roles: Accountant, Business Development, CFO / FP&A, Customer Success Manager, Financial Analyst
Specialties: API
Tools: PayPal, QuickBooks, Stripe
Country applicability: Country not specified
Classification basis: Source catalog labels
Instruction SHA-256: e09c0061b6dad2d33c9b4708b1bd3ec0ce3cfc503b32616e8b507181ca1ec42d