Billing glossary.
Clear, jargon-free definitions for the subscription billing and payments terms that come up when you're choosing or building a billing system.
Free and open-source under AGPLv3 — self-host today, or talk to us about cloud.
- Dunning letter
- A dunning letter is a notification sent to a customer when a payment has failed or is overdue, asking them to update their payment method or settle the balance. In subscription billing it is usually sent automatically as one step in a sequence of retries and reminders that aim to recover the payment before the subscription is cancelled.
- Dunning
- Dunning is the process of communicating with customers to recover failed or overdue payments. In subscription and SaaS billing, dunning combines automated payment retries with a sequence of reminders — email, and sometimes SMS or in-app messages — that prompt customers to update an expired or declined payment method before their subscription lapses.
- Payment orchestration
- Payment orchestration is a layer that connects a business to multiple payment processors and routes each transaction to the best one — handling retries, failover, and reconciliation through a single integration, instead of wiring up and maintaining each processor separately.
- Recurring billing
- Recurring billing is the automated charging of customers on a repeating schedule — weekly, monthly, or annually — for an ongoing subscription or service. The billing system stores the customer’s payment method and generates and collects each invoice automatically, without re-entering payment details every cycle.
- Usage-based pricing
- Usage-based pricing charges customers according to how much they consume — per API call, per gigabyte, per seat, or any unit you track — rather than a flat subscription fee. Costs scale with usage, so customers pay for what they actually use and spend grows with the value they get.
- Metered billing
- Metered billing measures how much of a product a customer uses during a billing period and charges them for that consumption. The billing system ingests usage events as they happen, aggregates them per customer and period, and generates an invoice based on the total — the engine that makes usage-based pricing possible.
- Proration
- Proration is the adjustment a billing system makes when a subscription changes partway through a billing period. Instead of charging a full period, it bills or credits the customer for the portion of the period actually used — so an upgrade, downgrade, or cancellation mid-cycle is reflected fairly on the next invoice.
- Involuntary churn
- Involuntary churn is when a customer is lost not because they chose to cancel, but because a payment failed — an expired card, insufficient funds, or a declined charge — and was never recovered. Unlike voluntary churn, the customer usually still wants the product, which makes it highly recoverable through dunning.