What is a billing period? First of all, we note that this is a fairly broad concept, which is used in completely different areas of human activity. For example, in accounting when calculating vacation pay. So, if we say what the settlement period is in a more global sense, this term allows you to evaluate the effectiveness of the investment project for a given period of time from the start of the project to its completion. However, in each area there may be a definition of this term.
Features
As a rule, the billing period is not a single, but a repeating period of time, which is introduced in the financial system for the convenience of mutual settlements. It is after this period that sums up, complete the calculations and other financial transactions.
There are no specific dates for the billing period. It is often determined individually and is always indicated in the contract between the parties. It is upon its completion that calculations should be made.
Duration
As a rule, the answer to the question: “What is a billing period?” sounds simple. Most often, this is one calendar month. However, it is important and necessary to understand that this is not always the case. For example, in pension legislation, such a period is considered one year. In some cases, the billing period may be shorter (six months, a quarter) and significantly shorter (one day or even several hours). The latter case is relevant when it comes to the stock exchange. For transactions with securities brokers really have a limited number of hours.
So, you must understand that when answering the question: “What is the“ billing period ”?”, You cannot name a specific period of time. In each case, it depends on the scope, and sometimes is decided individually.
In the bank
A credit institution is one of the organizations through which enormous financial flows pass daily. It is not surprising that the term “settlement period” is actively used here.
Banks in particular take loans. In this case, it is very important to discuss the terms and conditions of repayment with clients. This is where the term “settlement period” will come in handy. The contract must specify what period of time will be used as it. As a rule, this is one calendar month, at the end of which the client must make the next payment.
It is important to know not only what the “billing period” is at the bank, but also what it is used for. In addition to the above loans, many other financial transactions are performed, for each of which a different period of time can be set to take stock.
For example, even when using debit cards, the client is confronted with the concept of “billing period” if he orders an account statement. It will display financial transactions completed within a given period of time.
By map
Let's discuss in more detail what a card’s billing period is. This is especially true for those customers who use a credit card. When using borrowed bank funds, it is necessary to manage to make payments on time in order to prevent delays and in this way to avoid interest accrual.
So, with the active use of a credit bank card, the client makes a lot of transactions, starting with cashless payments at retail outlets and ending with cash withdrawals.
The settlement period in this case is a period of time after which a report is drawn up on the card, in which all expenses and balance replenishment are taken into account. In the case of a credit card, this is necessary for the correct calculation of interest accrued by the bank.
What do you need to know?
It is important for customers who use credit cards that it is strongly discouraged to neglect interest payment dates. Otherwise, delays and subsequent penalties from banks arise, as well as negative consequences in the form of a damaged credit history.
That is why it is important to know what the days of the billing period are and why you need to be able to correctly calculate them.
- First of all, it allows you to control the accrual of interest on a credit card. As soon as the grace period ends, the bank automatically accrues interest on the use of borrowed funds. If you fail to make a payment on time, you won’t be able to avoid it.
- It is important to understand that the end of the credit card billing period is the day when the funds should already be credited to the account. However, their actual introduction is better to carry out in advance. This is due to the fact that funds may arrive with a delay.
- The settlement period for different banks may have different durations. This is important to consider for those customers who use credit cards of several financial institutions. In this case, you can easily get confused. To avoid this, it is important to know the billing period.
For vacation
Most people work as employees and have a permanent employer. If the employment relationship is formalized, employees are entitled to an annual paid vacation. That is why it will be useful to know what the estimated vacation period is. Knowing your labor rights, you can prevent their violation.
So, in accordance with the Labor legislation, the employer is required to provide 28 calendar days of rest each employee. However, for some professions, this figure can be adjusted upward. For example, when working in hazardous conditions.
The calculation period in this case allows you to correctly calculate the average earnings. Based on the received figure, accounting staff calculate the size of vacation payments. And in case of refusal of the rest stipulated by the law, the employee has the right to receive monetary compensation. To calculate it, you also need to know the duration of the billing period. This is the basis for all kinds of calculations in accounting.
You need to understand that in the billing period include only the days on which the employee performed his work duties. For example, maternity leave is not included in this period. This also applies to absenteeism and holidays at your own expense.