What is the definition of cycle billing?

Cycle billing refers to the preparation of monthly cardholder statements by grouping accounts. This approach allows businesses to manage their billing process more efficiently by categorizing customers into cycles based on specific criteria such as billing dates or account characteristics. By sending out statements in a staggered manner, businesses can improve cash flow, reduce administrative costs, and better handle customer inquiries.

In cycle billing, each group of customers receives their statements at different times during the month, rather than all customers receiving their statements simultaneously. This practice helps to smooth out cash flow and can reduce the strain on customer service resources when many customers have questions or issues regarding their statements.

While preparing monthly statements is a component of cycle billing, the critical aspect is the grouping of accounts into cycles to optimize the billing process and maintain a consistent cash flow. This distinguishes cycle billing from simply issuing statements on a standard monthly schedule, which can become overwhelming and less efficient.