How does SaaS billing work?

Common scenarios include mid-month upgrades with prorated charges, downgrades credited against future invoices, annual contracts paid by invoice and purchase order, and seats added partway through a billing period. Each has financial implications and must be handled correctly in the software.

Failed payments are managed through a process known as dunning, which defines how often payment is retried, which emails are sent and what access the customer retains in the meantime. This policy should be agreed with the business.

We recommend using an established billing provider such as Stripe. The platform then manages entitlements, translating each customer’s plan into the features they can access, and keeps billing and application data reconciled.

Webhook handlers must be idempotent, as payment providers may deliver the same event more than once.