Reconciliation Based Billing
Reconciliation-based billing is a method of invoicing customers from reconciled usage and subscription data rather than static or estimated charges. The partner matches what was provisioned and consumed against the provider invoice, then bills the customer from the reconciled result.
Key Takeaways
- Bills from reconciled actuals, not estimates.
- Adjusts to real provisioned and used quantities each period.
- Prevents over-billing and under-billing.
- Central to protecting margin in CSP and Azure billing.
How it works
Pull provisioning and usage data for the period, reconcile it against the provider invoice from Microsoft or the distributor, apply contract terms and margin, then generate the customer invoice from the reconciled figures.
Why it matters for Microsoft CSPs
Estimated or static billing drifts from reality as subscriptions and usage change. Reconciliation-based billing closes that gap every period, so what you bill matches what you were billed and margin stays visible.
Reconciliation-based billing vs flat recurring billing
Flat recurring billing charges a set amount each period. Reconciliation-based billing adjusts to actual provisioned and used quantities, which prevents over- and under-billing.
How Work 365 supports this
Work 365 reconciles subscriptions and Azure usage to contracts and produces margin-aware invoices automatically. See Billing and Invoicing.
Related terms: Invoice Reconciliation, CSP Billing Reconciliation, Revenue Leakage, Azure Billing.
FAQ
How is reconciliation-based billing different from flat recurring billing?
Flat billing charges a set amount; reconciliation-based billing adjusts to actual quantities, preventing over- and under-billing.
Where does reconciliation-based billing matter most?
In Azure usage and in any CSP scenario where quantities change during the period.
