billing-automation

name	billing-automation
description	Build automated billing systems for recurring payments, invoicing, subscription lifecycle, and dunning management. Use when implementing subscription billing, automating invoicing, or managing recurring payment systems.

Billing Automation

Master automated billing systems including recurring billing, invoice generation, dunning management, proration, and tax calculation.

When to Use This Skill

• Implementing SaaS subscription billing
• Automating invoice generation and delivery
• Managing failed payment recovery (dunning)
• Calculating prorated charges for plan changes
• Handling sales tax, VAT, and GST
• Processing usage-based billing
• Managing billing cycles and renewals

Core Concepts

1. Billing Cycles

Common Intervals:

• Monthly (most common for SaaS)
• Annual (discounted long-term)
• Quarterly
• Weekly
• Custom (usage-based, per-seat)

2. Subscription States

trial → active → past_due → canceled
              → paused → resumed

3. Dunning Management

Automated process to recover failed payments through:

• Retry schedules
• Customer notifications
• Grace periods
• Account restrictions

4. Proration

Adjusting charges when:

• Upgrading/downgrading mid-cycle
• Adding/removing seats
• Changing billing frequency

Quick Start

from billing import BillingEngine, Subscription

# Initialize billing engine
billing = BillingEngine()

# Create subscription
subscription = billing.create_subscription(
    customer_id="cus_123",
    plan_id="plan_pro_monthly",
    billing_cycle_anchor=datetime.now(),
    trial_days=14
)

# Process billing cycle
billing.process_billing_cycle(subscription.id)

Subscription Lifecycle Management

from datetime import datetime, timedelta
from enum import Enum

class SubscriptionStatus(Enum):
    TRIAL = "trial"
    ACTIVE = "active"
    PAST_DUE = "past_due"
    CANCELED = "canceled"
    PAUSED = "paused"

class Subscription:
    def __init__(self, customer_id, plan, billing_cycle_day=None):
        self.id = generate_id()
        self.customer_id = customer_id
        self.plan = plan
        self.status = SubscriptionStatus.TRIAL
        self.current_period_start = datetime.now()
        self.current_period_end = self.current_period_start + timedelta(days=plan.trial_days or 30)
        self.billing_cycle_day = billing_cycle_day or self.current_period_start.day
        self.trial_end = datetime.now() + timedelta(days=plan.trial_days) if plan.trial_days else None

    def start_trial(self, trial_days):
        """Start trial period."""
        self.status = SubscriptionStatus.TRIAL
        self.trial_end = datetime.now() + timedelta(days=trial_days)
        self.current_period_end = self.trial_end

    def activate(self):
        """Activate subscription after trial or immediately."""
        self.status = SubscriptionStatus.ACTIVE
        self.current_period_start = datetime.now()
        self.current_period_end = self.calculate_next_billing_date()

    def mark_past_due(self):
        """Mark subscription as past due after failed payment."""
        self.status = SubscriptionStatus.PAST_DUE
        # Trigger dunning workflow

    def cancel(self, at_period_end=True):
        """Cancel subscription."""
        if at_period_end:
            self.cancel_at_period_end = True
            # Will cancel when current period ends
        else:
            self.status = SubscriptionStatus.CANCELED
            self.canceled_at = datetime.now()

    def calculate_next_billing_date(self):
        """Calculate next billing date based on interval."""
        if self.plan.interval == 'month':
            return self.current_period_start + timedelta(days=30)
        elif self.plan.interval == 'year':
            return self.current_period_start + timedelta(days=365)
        elif self.plan.interval == 'week':
            return self.current_period_start + timedelta(days=7)

Billing Cycle Processing

class BillingEngine:
    def process_billing_cycle(self, subscription_id):
        """Process billing for a subscription."""
        subscription = self.get_subscription(subscription_id)

        # Check if billing is due
        if datetime.now() < subscription.current_period_end:
            return

        # Generate invoice
        invoice = self.generate_invoice(subscription)

        # Attempt payment
        payment_result = self.charge_customer(
            subscription.customer_id,
            invoice.total
        )

        if payment_result.success:
            # Payment successful
            invoice.mark_paid()
            subscription.advance_billing_period()
            self.send_invoice(invoice)
        else:
            # Payment failed
            subscription.mark_past_due()
            self.start_dunning_process(subscription, invoice)

    def generate_invoice(self, subscription):
        """Generate invoice for billing period."""
        invoice = Invoice(
            customer_id=subscription.customer_id,
            subscription_id=subscription.id,
            period_start=subscription.current_period_start,
            period_end=subscription.current_period_end
        )

        # Add subscription line item
        invoice.add_line_item(
            description=subscription.plan.name,
            amount=subscription.plan.amount,
            quantity=subscription.quantity or 1
        )

        # Add usage-based charges if applicable
        if subscription.has_usage_billing:
            usage_charges = self.calculate_usage_charges(subscription)
            invoice.add_line_item(
                description="Usage charges",
                amount=usage_charges
            )

        # Calculate tax
        tax = self.calculate_tax(invoice.subtotal, subscription.customer)
        invoice.tax = tax

        invoice.finalize()
        return invoice

    def charge_customer(self, customer_id, amount):
        """Charge customer using saved payment method."""
        customer = self.get_customer(customer_id)

        try:
            # Charge using payment processor
            charge = stripe.Charge.create(
                customer=customer.stripe_id,
                amount=int(amount * 100),  # Convert to cents
                currency='usd'
            )

            return PaymentResult(success=True, transaction_id=charge.id)
        except stripe.error.CardError as e:
            return PaymentResult(success=False, error=str(e))

Dunning Management

class DunningManager:
    """Manage failed payment recovery."""

    def __init__(self):
        self.retry_schedule = [
            {'days': 3, 'email_template': 'payment_failed_first'},
            {'days': 7, 'email_template': 'payment_failed_reminder'},
            {'days': 14, 'email_template': 'payment_failed_final'}
        ]

    def start_dunning_process(self, subscription, invoice):
        """Start dunning process for failed payment."""
        dunning_attempt = DunningAttempt(
            subscription_id=subscription.id,
            invoice_id=invoice.id,
            attempt_number=1,
            next_retry=datetime.now() + timedelta(days=3)
        )

        # Send initial failure notification
        self.send_dunning_email(subscription, 'payment_failed_first')

        # Schedule retries
        self.schedule_retries(dunning_attempt)

    def retry_payment(self, dunning_attempt):
        """Retry failed payment."""
        subscription = self.get_subscription(dunning_attempt.subscription_id)
        invoice = self.get_invoice(dunning_attempt.invoice_id)

        # Attempt payment again
        result = self.charge_customer(subscription.customer_id, invoice.total)

        if result.success:
            # Payment succeeded
            invoice.mark_paid()
            subscription.status = SubscriptionStatus.ACTIVE
            self.send_dunning_email(subscription, 'payment_recovered')
            dunning_attempt.mark_resolved()
        else:
            # Still failing
            dunning_attempt.attempt_number += 1

            if dunning_attempt.attempt_number < len(self.retry_schedule):
                # Schedule next retry
                next_retry_config = self.retry_schedule[dunning_attempt.attempt_number]
                dunning_attempt.next_retry = datetime.now() + timedelta(days=next_retry_config['days'])
                self.send_dunning_email(subscription, next_retry_config['email_template'])
            else:
                # Exhausted retries, cancel subscription
                subscription.cancel(at_period_end=False)
                self.send_dunning_email(subscription, 'subscription_canceled')

    def send_dunning_email(self, subscription, template):
        """Send dunning notification to customer."""
        customer = self.get_customer(subscription.customer_id)

        email_content = self.render_template(template, {
            'customer_name': customer.name,
            'amount_due': subscription.plan.amount,
            'update_payment_url': f"https://app.example.com/billing"
        })

        send_email(
            to=customer.email,
            subject=email_content['subject'],
            body=email_content['body']
        )

Proration

class ProrationCalculator:
    """Calculate prorated charges for plan changes."""

    @staticmethod
    def calculate_proration(old_plan, new_plan, period_start, period_end, change_date):
        """Calculate proration for plan change."""
        # Days in current period
        total_days = (period_end - period_start).days

        # Days used on old plan
        days_used = (change_date - period_start).days

        # Days remaining on new plan
        days_remaining = (period_end - change_date).days

        # Calculate prorated amounts
        unused_amount = (old_plan.amount / total_days) * days_remaining
        new_plan_amount = (new_plan.amount / total_days) * days_remaining

        # Net charge/credit
        proration = new_plan_amount - unused_amount

        return {
            'old_plan_credit': -unused_amount,
            'new_plan_charge': new_plan_amount,
            'net_proration': proration,
            'days_used': days_used,
            'days_remaining': days_remaining
        }

    @staticmethod
    def calculate_seat_proration(current_seats, new_seats, price_per_seat, period_start, period_end, change_date):
        """Calculate proration for seat changes."""
        total_days = (period_end - period_start).days
        days_remaining = (period_end - change_date).days

        # Additional seats charge
        additional_seats = new_seats - current_seats
        prorated_amount = (additional_seats * price_per_seat / total_days) * days_remaining

        return {
            'additional_seats': additional_seats,
            'prorated_charge': max(0, prorated_amount),  # No refund for removing seats mid-cycle
            'effective_date': change_date
        }

Tax Calculation

class TaxCalculator:
    """Calculate sales tax, VAT, GST."""

    def __init__(self):
        # Tax rates by region
        self.tax_rates = {
            'US_CA': 0.0725,  # California sales tax
            'US_NY': 0.04,    # New York sales tax
            'GB': 0.20,       # UK VAT
            'DE': 0.19,       # Germany VAT
            'FR': 0.20,       # France VAT
            'AU': 0.10,       # Australia GST
        }

    def calculate_tax(self, amount, customer):
        """Calculate applicable tax."""
        # Determine tax jurisdiction
        jurisdiction = self.get_tax_jurisdiction(customer)

        if not jurisdiction:
            return 0

        # Get tax rate
        tax_rate = self.tax_rates.get(jurisdiction, 0)

        # Calculate tax
        tax = amount * tax_rate

        return {
            'tax_amount': tax,
            'tax_rate': tax_rate,
            'jurisdiction': jurisdiction,
            'tax_type': self.get_tax_type(jurisdiction)
        }

    def get_tax_jurisdiction(self, customer):
        """Determine tax jurisdiction based on customer location."""
        if customer.country == 'US':
            # US: Tax based on customer state
            return f"US_{customer.state}"
        elif customer.country in ['GB', 'DE', 'FR']:
            # EU: VAT
            return customer.country
        elif customer.country == 'AU':
            # Australia: GST
            return 'AU'
        else:
            return None

    def get_tax_type(self, jurisdiction):
        """Get type of tax for jurisdiction."""
        if jurisdiction.startswith('US_'):
            return 'Sales Tax'
        elif jurisdiction in ['GB', 'DE', 'FR']:
            return 'VAT'
        elif jurisdiction == 'AU':
            return 'GST'
        return 'Tax'

    def validate_vat_number(self, vat_number, country):
        """Validate EU VAT number."""
        # Use VIES API for validation
        # Returns True if valid, False otherwise
        pass

Invoice Generation

class Invoice:
    def __init__(self, customer_id, subscription_id=None):
        self.id = generate_invoice_number()
        self.customer_id = customer_id
        self.subscription_id = subscription_id
        self.status = 'draft'
        self.line_items = []
        self.subtotal = 0
        self.tax = 0
        self.total = 0
        self.created_at = datetime.now()

    def add_line_item(self, description, amount, quantity=1):
        """Add line item to invoice."""
        line_item = {
            'description': description,
            'unit_amount': amount,
            'quantity': quantity,
            'total': amount * quantity
        }
        self.line_items.append(line_item)
        self.subtotal += line_item['total']

    def finalize(self):
        """Finalize invoice and calculate total."""
        self.total = self.subtotal + self.tax
        self.status = 'open'
        self.finalized_at = datetime.now()

    def mark_paid(self):
        """Mark invoice as paid."""
        self.status = 'paid'
        self.paid_at = datetime.now()

    def to_pdf(self):
        """Generate PDF invoice."""
        from reportlab.pdfgen import canvas

        # Generate PDF
        # Include: company info, customer info, line items, tax, total
        pass

    def to_html(self):
        """Generate HTML invoice."""
        template = """
        <!DOCTYPE html>
        <html>
        <head><title>Invoice #{invoice_number}</title></head>
        <body>
            <h1>Invoice #{invoice_number}</h1>
            <p>Date: {date}</p>
            <h2>Bill To:</h2>
            <p>{customer_name}<br>{customer_address}</p>
            <table>
                <tr><th>Description</th><th>Quantity</th><th>Amount</th></tr>
                {line_items}
            </table>
            <p>Subtotal: ${subtotal}</p>
            <p>Tax: ${tax}</p>
            <h3>Total: ${total}</h3>
        </body>
        </html>
        """

        return template.format(
            invoice_number=self.id,
            date=self.created_at.strftime('%Y-%m-%d'),
            customer_name=self.customer.name,
            customer_address=self.customer.address,
            line_items=self.render_line_items(),
            subtotal=self.subtotal,
            tax=self.tax,
            total=self.total
        )

Usage-Based Billing

class UsageBillingEngine:
    """Track and bill for usage."""

    def track_usage(self, customer_id, metric, quantity):
        """Track usage event."""
        UsageRecord.create(
            customer_id=customer_id,
            metric=metric,
            quantity=quantity,
            timestamp=datetime.now()
        )

    def calculate_usage_charges(self, subscription, period_start, period_end):
        """Calculate charges for usage in billing period."""
        usage_records = UsageRecord.get_for_period(
            subscription.customer_id,
            period_start,
            period_end
        )

        total_usage = sum(record.quantity for record in usage_records)

        # Tiered pricing
        if subscription.plan.pricing_model == 'tiered':
            charge = self.calculate_tiered_pricing(total_usage, subscription.plan.tiers)
        # Per-unit pricing
        elif subscription.plan.pricing_model == 'per_unit':
            charge = total_usage * subscription.plan.unit_price
        # Volume pricing
        elif subscription.plan.pricing_model == 'volume':
            charge = self.calculate_volume_pricing(total_usage, subscription.plan.tiers)

        return charge

    def calculate_tiered_pricing(self, total_usage, tiers):
        """Calculate cost using tiered pricing."""
        charge = 0
        remaining = total_usage

        for tier in sorted(tiers, key=lambda x: x['up_to']):
            tier_usage = min(remaining, tier['up_to'] - tier['from'])
            charge += tier_usage * tier['unit_price']
            remaining -= tier_usage

            if remaining <= 0:
                break

        return charge

Project-Specific Implementation

For OmoiOS-specific billing implementation details, see:

• omoios_billing_reference.md - OmoiOS infrastructure mapping

Resources

• references/billing-cycles.md: Billing cycle management
• references/dunning-management.md: Failed payment recovery
• references/proration.md: Prorated charge calculations
• references/tax-calculation.md: Tax/VAT/GST handling
• references/invoice-lifecycle.md: Invoice state management
• assets/billing-state-machine.yaml: Billing workflow
• assets/invoice-template.html: Invoice templates
• assets/dunning-policy.yaml: Dunning configuration

Best Practices

1. Automate Everything: Minimize manual intervention
2. Clear Communication: Notify customers of billing events
3. Flexible Retry Logic: Balance recovery with customer experience
4. Accurate Proration: Fair calculation for plan changes
5. Tax Compliance: Calculate correct tax for jurisdiction
6. Audit Trail: Log all billing events
7. Graceful Degradation: Handle edge cases without breaking

Common Pitfalls

• Incorrect Proration: Not accounting for partial periods
• Missing Tax: Forgetting to add tax to invoices
• Aggressive Dunning: Canceling too quickly
• No Notifications: Not informing customers of failures
• Hardcoded Cycles: Not supporting custom billing dates