Glossary
Prepaid credits
Prepaid credits are a balance a customer buys up front and draws down as they consume, so usage is deducted from money already paid rather than invoiced afterwards.
Also called prepaid balance, credit wallet.
Credits move collection ahead of consumption, which helps cash flow and removes the collections risk of pure arrears billing. They are common in AI and infrastructure products sold self-serve.
They also introduce accounting questions that arrears billing does not. A credit purchase is not revenue at the point of sale; it is a liability that becomes revenue as the customer consumes, and expiry rules change when that happens.
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