Glossary
Billing in arrears
Billing in arrears means invoicing a customer after the service period has ended, once actual consumption for that period is known.
Also called bill in arrears, arrears billing.
It is the natural counterpart to usage-based pricing: you cannot invoice for consumption before it happens. The alternative, billing in advance, charges at the start of the period and suits fixed subscriptions.
Most usage-based businesses run both at once, charging a recurring fee in advance and usage in arrears on the same invoice.
Related terms