Billing Engine logic

Below is a step-by-step, industry-grade tutorial roadmap to build Billing Engine Logic similar to Chargebee / Stripe Billing, tailored for SaaS & enterprise systems.

I’ll structure this as:

  1. Concepts → Logic → Implementation
  2. Beginner → Advanced → Production-ready
  3. System-design + backend focus

🚀 Billing Engine Logic – Complete Tutorial Roadmap

🧩 PHASE 1: Billing Fundamentals (MUST-KNOW)

1️⃣ What Is a Billing Engine?

  • Responsibilities of a billing engine
  • Billing engine vs Payment gateway
  • Online vs Offline billing
  • Event-driven billing

📌 Output: Clear mental model

2️⃣ Core Billing Concepts

Learn these deeply:

  • Subscription
  • Plan
  • Price
  • Add-on
  • Metered usage
  • Invoice
  • Payment
  • Credit note
  • Refund
  • Dunning

📌 Output: Business vocabulary mastery

🧱 PHASE 2: Billing Data Model (VERY IMPORTANT)

3️⃣ Database Schema Design

Design tables for:

  • customers
  • subscriptions
  • plans
  • prices
  • billing_cycles
  • invoices
  • invoice_line_items
  • payments
  • payment_attempts
  • credits
  • usage_records

📌 Key fields to understand:

  • interval_unit
  • interval_count
  • billing_anchor
  • trial_end
  • next_billing_at
  • proration_factor

4️⃣ Multi-Tenancy in Billing

  • Tenant isolation strategies
  • Tenant-aware pricing
  • Currency per tenant
  • Tax per tenant

📌 Output: SaaS-ready design

⏱️ PHASE 3: Billing Cycle & Time Logic

5️⃣ Billing Period Calculation

  • Monthly / yearly cycles
  • Billing anchors
  • Calendar alignment
  • Leap years, month lengths
next_billing_date = anchor + interval_count × interval_unit

6️⃣ Trial & Grace Period Logic

  • Free trials
  • Paid trials
  • Grace periods
  • Expiry handling

📌 Edge cases included

💰 PHASE 4: Price Calculation Engine

7️⃣ Fixed Price Billing

  • Flat monthly pricing
  • Seat-based pricing
  • Tiered pricing

8️⃣ Proration Engine (CRITICAL)

  • Upgrade mid-cycle
  • Downgrade mid-cycle
  • Add-on mid-cycle
  • Time-based proration formula
prorated_amount = price × (remaining_time / total_cycle_time)

📌 This is interview gold

9️⃣ Usage-Based Billing

  • Metering events
  • Usage aggregation
  • Late usage
  • Overages

📌 Example: API calls, storage, seats

🧾 PHASE 5: Invoice Engine

🔟 Invoice Generation Logic

  • Invoice lifecycle
  • Draft → Final → Paid
  • Invoice numbering
  • Line item grouping

1️⃣1️⃣ Taxes & Discounts

  • Inclusive vs exclusive tax
  • Coupons
  • Promotions
  • Regional tax rules (GST/VAT)

💳 PHASE 6: Payment & Dunning Engine

1️⃣2️⃣ Payment Processing

  • Payment intents
  • Retry logic
  • Partial payments
  • Wallet credits

1️⃣3️⃣ Dunning & Retry Strategy

  • Smart retries
  • Grace windows
  • Subscription suspension
  • Account reactivation

📌 Revenue-critical logic

🔁 PHASE 7: Event-Driven Billing Architecture

1️⃣4️⃣ Billing Events

  • SubscriptionCreated
  • InvoiceGenerated
  • PaymentSucceeded
  • PaymentFailed

📌 Use Kafka / RabbitMQ

1️⃣5️⃣ Idempotency & Consistency

  • Duplicate events
  • Exactly-once billing
  • Distributed locks

🔐 PHASE 8: Security & Compliance

1️⃣6️⃣ PCI & Security Boundaries

  • Never store card details
  • Tokenization
  • Webhook verification

1️⃣7️⃣ Auditing & Logs

  • Immutable invoice data
  • Audit trails
  • Financial reconciliation

🧪 PHASE 9: Testing Billing Logic (CRITICAL)

1️⃣8️⃣ Edge Case Testing

  • Time zone changes
  • Leap years
  • Failed payments
  • Currency rounding

1️⃣9️⃣ Simulation Engine

  • Dry-run billing
  • Preview invoice
  • What-if scenarios

☁️ PHASE 10: Production Readiness

2️⃣0️⃣ Scaling the Billing Engine

  • Batch billing jobs
  • Parallel invoice generation
  • Database partitioning

2️⃣1️⃣ Reporting & Analytics

  • MRR
  • ARR
  • Churn
  • LTV

🎯 Final Capstone Project (VERY IMPORTANT)

🔥 Build a Mini Chargebee-Like Engine

Features:

  • Monthly + yearly plans
  • Proration
  • Invoices
  • Usage billing
  • Retry logic

Tech stack suggestion:

  • Spring Boot
  • PostgreSQL
  • Kafka
  • Redis
  • Quartz Scheduler

🧠 Interview-Ready Summary

A billing engine is a time-driven, event-based financial system that calculates charges, generates invoices, handles payments, and ensures financial correctness across subscription lifecycles.

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