IntermediateSystem-Design
30 min
Design a Subscription Billing System
BillingPaymentsFinance
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Interview Question
Design a recurring billing system with plan management, invoicing, dunning, and proration.
Key Points to Cover
- Subscription plans: upgrades, downgrades, trials
- Invoicing: tax, discounts, credits, proration
- Payments: retries, dunning, failed payment handling
- Ledger and reconciliation processes
- Integrations: ERP, reporting, revenue recognition
Evaluation Rubric
Flexible subscription plan model25% weight
Accurate invoicing and proration25% weight
Robust dunning and retry strategy25% weight
Reliable ledger and reconciliation25% weight
Hints
- 💡Handle mid-cycle plan changes carefully.
Common Pitfalls to Avoid
- ⚠️Inaccurate or overly simplistic proration calculations, leading to billing disputes.
- ⚠️Lack of a comprehensive dunning strategy, resulting in significant revenue loss from failed payments.
- ⚠️Poorly designed plan upgrade/downgrade logic, causing customer confusion and frustration.
- ⚠️Insufficient handling of edge cases like subscription cancellations mid-cycle or during free trials.
- ⚠️Failure to properly account for taxes, discounts, and credits across all billing scenarios.
Potential Follow-up Questions
- ❓How to support usage-based billing?
- ❓How to handle international tax compliance?
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