About reconciliation

A great many equipment contracts include a minimum. The customer commits to paying for, say, five thousand black copies a month whether or not they print them; in exchange they get a rate per copy that would be uneconomic to offer otherwise. The minimum is what makes the deal work for the dealer, and the rate is what makes it work for the customer.

Minimums are easy to write into a contract and surprisingly hard to bill. Reconciliation is the name BMS gives to the machinery that settles what was committed against what was actually used, and it is the part of billing that generates the most questions.

The problem a minimum creates

Consider a customer committed to 5,000 copies a month who prints 3,000 in January and 7,000 in February.

Bill each month in isolation and they pay for 5,000 in January (2,000 of them for nothing) and 5,000 plus 2,000 excess in February. Over two months they committed to 10,000, used 10,000, and paid for 12,000. Most customers regard that as sharp practice, and most sales conversations promise it will not happen.

Avoiding it means the January shortfall has to be remembered and offset against the February overage — which means billing can no longer treat a month as a self-contained event. Something has to carry forward. That something is what the reconciliation setting on a contract controls.

The four approaches

BMS offers four, and they are genuinely different commercial arrangements rather than four ways of doing the same thing.

None treats every month on its own. Usage above the minimum is billed as excess; usage below it is simply not billed, and the shortfall is forgotten. This is the simplest to explain to a customer and the most favourable to the dealer, and it is a perfectly reasonable choice where the minimum is low enough that customers rarely fall short of it.

Basic banks the shortfall. Copies the customer paid for but did not use accumulate as available credits, and future excess is drawn against that balance before anything is billed. In the example above the customer would pay nothing extra in February: the 2,000 credits from January cover the 2,000 excess. This is the arrangement most customers assume they have, and the contract's charge screen shows the running balance — copies billed to date, usage to date, and credits available — so you can answer the question without calculating it yourself.

Periodic settles on a cycle rather than continuously. Nothing is billed as excess month to month; instead BMS accumulates the minimum and the usage across a fixed number of periods, and at the end of the cycle bills the difference if the customer is over. A quarterly reconciliation on a monthly contract means three ordinary months followed by one that squares up. This suits customers with seasonal patterns — a school, an accounting practice — where a single month is a poor measure of anything.

Actual runs the same cycle in the opposite direction. It accumulates the same way, but at reconciliation it bills the shortfall: if the customer used less than they committed to over the cycle, they are charged for the difference. This is how a genuine take-or-pay commitment is enforced, and it is the arrangement to use where the minimum is the substance of the deal rather than a floor beneath it.

Periodic and Actual both carry a number of periods with them, which is why they appear on screen as Periodic-3 or Actual-12 rather than by name alone. Only the period at the end of the cycle actually reconciles; the ones in between accumulate quietly, which is why a contract can go months showing no excess and then produce a large line in one month.

Reading the numbers on screen

A charge with a minimum shows its reconciliation state as a small block of running totals, and each has a precise meaning worth knowing:

• Billed to date is how many units the customer has been charged for across the life of the charge, minimums included.
• Usage to date is how many they have actually used.
• Billed in advance is the portion already charged for periods that have not yet happened.
• Available credits is the balance of paid-for-but-unused units, on a contract that banks them.

The gap between billed and used is the whole story of a minimum contract, and these four figures are how you explain it to a customer without opening a spreadsheet.

Why changing the setting is not a small thing

The reconciliation type is not a display preference. It decides what the carried balances mean, and those balances have been accumulating since the contract began. Switching a live contract from Basic to Periodic does not recalculate history; it changes the rules from that point on, on top of figures that were produced under the old rules.

There is a proper way to change it retrospectively, and it is a deliberate operation rather than an edit on a form. If a contract's reconciliation was set up wrongly and has been billing for a year, treat correcting it as a piece of work in its own right — establish what the customer should have been charged, then correct the position — rather than as a change of setting.

A note on fairness

It is tempting to see None as the harsh option and Basic as the generous one, and to standardise on Basic for that reason. That is worth resisting. These four settings correspond to four different things you can promise a customer, and the right one is whichever matches what was actually agreed. A contract sold on a genuine volume commitment and configured as Basic will quietly fail to collect what the business is owed; a contract sold as "you only pay for what you use, with a floor" and configured as None will produce an argument the first time the customer adds up a year of invoices.

The setting should be a record of the agreement, not a policy applied on top of it.