SB509 – All Invoicing Options in Subscription Billing: Sales Orders, Free Text, Consolidation & Arrears Explained

Table of Contents

🌐 Introduction

Welcome to SB509 in our Subscription Billing blog series! After covering Pricing Methods and Discounts in SB508, it’s time to tackle one of the most critical topics in subscription billing: Invoicing.

In D365 Finance, Subscription Billing offers highly flexible invoicing through multiple options, formats, and frequency models. But flexibility can also mean complexity—so in this post, we’ll demystify every available invoicing option using our CRM SaaS use case and real product items like:

SBX-CRM-M01 – Monthly CRM Subscription
SBX-RNW-ANN1 – Annual CRM Renewal
SBX-CONS-API01 – Usage-based API Billing

🧾 Invoicing Options in D365 Subscription Billing

Every billing schedule can trigger invoices using one of two methods:

Note – You must select required ‘Invoice Transaction nature code’ before adding and processing schedule lines.

Sales order – invoices are based on items (from the released products list), which go through item dimensions, pricing, posting profiles, etc.

Free text invoices are used for non-stock/service billing where no item number is required or allowed — you just bill based on a description, revenue account, and amount.

image-81 SB509 – All Invoicing Options in Subscription Billing: Sales Orders, Free Text, Consolidation & Arrears Explained

Invoice Type	Description	Use Cases	When to Use
Sales Order	Standard sales order processed through Accounts Receivable	Inventory-based subscriptions, service bundles, deferred revenue recognition	Use when billing involves items, revenue allocation, deferrals, or sales tax
Free Text Invoice	AR invoice without inventory or sales order impact	One-time services, setup fees, implementation charges, flat-rate consulting	Use when no item tracking is needed and billing is account-based, not item-based

🔄 Invoice Timing: Advance vs Arrears

Option	Description	Example
In Advance	Invoice at the start of the billing period	Invoice on 1st April for April
In Arrears	Invoice after the billing period ends	Invoice on 1st May for April usage

In Advance

In Arrears

image-79 SB509 – All Invoicing Options in Subscription Billing: Sales Orders, Free Text, Consolidation & Arrears Explained

📋 Consolidation Options

You can group or split invoices based on:

Option	Use Case	When to Use	Output
By Customer	One invoice per customer	When the customer has multiple contracts or products to bill together	Single invoice showing all eligible lines
By Schedule	One invoice per billing schedule/contract	When each subscription needs its own invoice for tracking or compliance	One invoice per billing schedule
By Item/Line	Split by product or charge type	When items must be invoiced separately (e.g., hardware vs. service)	Separate invoice lines per item or category
Per Period	Consolidate by billing period	When billing is done monthly, quarterly, annually and grouped accordingly	One invoice per customer per billing period

Consolidation tab

image-80 SB509 – All Invoicing Options in Subscription Billing: Sales Orders, Free Text, Consolidation & Arrears Explained

Periodic Tasks > Generate Invoice > Advance Query

🔄 Usage Billing: Invoice Only When Used

For SBX-CONS-API01 (API consumption):

If no usage is entered, no invoice is created

image-78 SB509 – All Invoicing Options in Subscription Billing: Sales Orders, Free Text, Consolidation & Arrears Explained

If usage is entered mid-month, you can invoice at end-of-period
Option to exclude zero-value lines is available during batch run

🎛 Additional Invoice Controls

Feature	Function	Screen / Path to Configure
Exclude 0 consumption lines	Hides billing lines with no usage or zero-value totals	✅ Generate invoice or Generate invoice batch processing screen → Toggle Exclude zero consumption = Yes
Top Billing	Caps invoice at a set amount or prioritizes items	✅ Billing schedule line > Advanced pricing → Use Max billing amount
Invoice Preview	Simulates invoice output before generating or posting	✅ Generate invoice screen → Click Preview invoice before posting
Separate invoice per item	Splits billing by product or service	✅ Generate invoice screen → Toggle Split by item group = Yes
Invoice batch job filter	Selectively invoices based on custom logic (e.g. usage only, renewals)	✅ Generate invoice batch processing → Use Records to include (advanced filter/query)

🧠 CRM SaaS Scenario – Invoice Variations

Line Item	Item No	Invoicing Type	Timing	Consolidation
CRM Subscription	SBX-CRM-M01	Sales Order	Monthly	Grouped (1 invoice)
Annual Renewal	SBX-RNW-ANN1	Sales Order	Annual	Separate
API Usage	SBX-CONS-API01	Sales Order	Arrears	Per period
Onboarding Fee	SBX-IMP-ONE	Free Text	One-time	Individual

📍 Where to Set Invoice Options in D365

Area	Path
Default invoice type	Recurring contract billing parameters
Line-level override	Billing schedule line > Invoice type
Consolidation/Filters	Periodic task > Generate invoice > Filter by item/date/schedule
Free text invoice config	Accounts receivable > Setup > Free text invoice templates

✅ Best Practices

Tip	Why It Matters
Use Sales Orders when inventory, projects, or standard posting rules are needed	Ensures full financial integration
Use Free Text Invoices for one-time fees or consulting	Lightweight and easier to customize
Always preview invoices using “View Billing Detail”	Avoids surprises or missed charges
Batch invoice monthly using filters and consolidation	Reduces manual workload and increases AR control
Align CPI escalation with annual invoices	Ensures price updates apply at correct times

🧭 Summary

D365 Subscription Billing offers robust control over how and when invoices are created. By combining invoice types, batch processing, and conditional logic like usage and top billing, you can tailor invoicing workflows for any subscription model.

Feature	Scenario Example
Sales order	Monthly CRM license (SBX-CRM-M01)
Free text invoice	One-time onboarding fee (SBX-IMP-ONE)
Usage billing	API usage by consumption (SBX-CONS-API01)
Annual advance bill	CRM Renewal upfront billing (SBX-RNW-ANN1)
Invoice grouping	CRM + Support on one invoice
Separate invoicing	Break out API charges or renewals