The billing and reimbursement cycle is a process that many types of businesses and organizations use to charge their customers on a recurring basis. Most billing cycles, including credit cards and television subscriptions, last one month. Others are bi-monthly, quarterly or annually. In each case the business performing the billing collects charges and reimbursements throughout the cycle before compiling bills for customers.
Closing the Cycle
When a business closes a customer's billing cycle, it creates a new document to begin collecting charges and reimbursements from the cycle. The current, closed cycle becomes the basis for a bill in the near future. The date on which a business closes your billing and reimbursement cycle appears on your bill as the last date in the period that the bill covers. For example, if your credit card's monthly billing cycle closes on the 20th day of each month, the account statement and bill you receive in late April will likely cover the billing cycle that lasted from March 21st to April 20th. Any charges, refunds, reimbursement of fees and transfers that you made between these dates will appear on the statement.
Applying Fees and Charges
Once a business closes a customer's previous billing cycle and starts a new one, it can apply any fees or charges based on transactions during the past cycle. Credit card companies charge interest, utility providers add taxes and municipal fees, and cell phone providers add usage chargers and surcharges. In most large businesses, a computer program generates these fees and adds them to the bill automatically.
The next key step in the billing and reimbursement cycle is the actual creation and transmission of bills and statements. Customers receive bills via mail, email or text message, depending on the options the business offers. If reimbursements or credits to an account are greater than charges or debits, the bill may include an account credit rather than an amount due, which will carry over to the next billing cycle. In other cases customers receive checks for the amount that the business owes them in reimbursement.
The final step in a billing and reimbursement cycle occurs when the business or organization receives its payment. In the case of customers who receive checks or credits, the corresponding step occurs when the customer cashes the check or the business transfers the credit to the next billing cycle. Throughout this process, the business continues to collect new charges and reimbursements for the next cycle, as the process continues for the life of a customer's account.