In several responses and replies to me in emails, people have wanted to know basic import on the terms on which this blog is based. So I will now attempt to answer these questions in this post as well as future posts. So Billing will be first term that I will try to address.
The Wikipedia and several other places on the net provide the different definitions for billing.
Let me attempt the turn of explaining this to you in a simple sequence from the inception of a business to the action of billing for initiating the chain or cycle of activities which help in recognizing the revenue of this business.
Say there is a need for some service/product which an individual, a group of individuals or a more specifically say a company /organization requires. So in absolutely bare terms and though there are more factors to it but in the minimalistic sense when the need for this service permeates beyond a critical number of individuals then the chance arises for a market to be created for this service.
Now this critical number is never a fixed number, it just cannot be. This number is recognized as demand defining threshold. And this threshold is the trigger which makes people having the resources, plan and knowhow to kind of satisfy this demand start taking notice of this demand.
But taking notice does not mean that they are going to start working on it and bring out the product /service which will satisfy this need. So what holds them back? The difference between the costs of production and the earnings/returns acquired from selling that product/service in the near term and the profitable sustenance of this need for the long term is what will be the all encompassing driver of actual production.
But as the market research, production, advertising, marketing, sales of the product /service and other related activity segments set in for that NEED we talked about above, we have created what we humans call “the business”.
Now for this business to survive, people providing the services not only need to earn just some capital but capital which is more than the cost of the resources they spent in the first place to come up with the products/services. So they need to make what we call as profit. And for earning their returns they need to ask for their customers to pay them for the products provided or the services rendered over a particular period of time.
In the simplest sense how much to ask the customer to pay and for what period of time, is what the process of Billing answers to the service provider/vendor. Hence it is billing that provides the instruments of communication between the provider and the consumer. Call it as you may the Bill, the Invoice, the statement of accounts. (Yes I know some of you would want me to mention words about Invoicing, will do that but on another day)
Billing gives the provider a picture of the monetization of the products/services, the provider provides to others. It summarizes how a business is charging for it’s services/products to it’s customers in the form of different rental fees or real-time charges. So Billing not only helps the product/service provider to earn his present day revenue but gives him tonnes of data for analysis. This analysis helps business self-evaluation which along with other activities will go a long way in instrumenting improvements in the way the business is delivered to it’s customers. And hence this in all probability will also tie back improvements in the billing process itself.
Also this billing data provides the seeds for crucial future innovations of a provider/producer’s offerings making up his business. And it is these innovations which in turn will spur further growth of business and thus the revenue.
Believe me this is just the introductory view of the tip of iceberg above the water and billing indeed is a very exhaustive topic with mind boggling dimensions and complexity. Will continue this journey and keep sharing more with you on the wonderful world of billing and the business of billing.