Advanced Azure Billing

Applies To: Work 365 (Dynamics 365 / Power Platform)
Audience: Billing Administrators, Finance Teams, System Implementers

Overview

Azure consumption billing behaves differently from license billing because Microsoft may revise Partner Center usage data multiple times after month-end (late usage, credits, refunds, corrections). Billing too early often yields incomplete or inaccurate invoices.
This guide covers when to bill (in arrears after the 15th), how to structure Billing Contracts, how to use Override Tolerance, and how to manage consumption data for accuracy and transparency.

Key Concepts

FAQs

1) Why should I wait until the 15th to bill customers for Azure?

Microsoft reconciles and updates Azure usage for up to two weeks after the period closes. Running invoices on the 1st–10th can miss credits or late usage.
Best practice: bill after the 15th of the month for the prior month.

2) Should I create separate contracts for Azure?

Yes. Use a dedicated Billing Contract for Azure usage:

• Set to bill in arrears

• Keep license and usage items separate

This simplifies reconciliation, improves performance, and yields clearer invoices.

3) How much should I set for Override Tolerance?

Override Tolerance is the allowed variance between Work 365’s computed total and Partner Center’s total before a checksum error is raised.

• Start small (≤ ~1%) to catch real discrepancies.

• If checksum errors occur:

  • Minor variance: reprocess usage in smaller date ranges/batches.

  • Major variance: compare Partner Center data for missing/duplicate lines or late credits.

4) Which file does Work 365 use from Partner Center?

Work 365 uses the Daily-Rated File (most detailed and reliable), including:

• Daily usage per resource

• Subscription/Entitlement IDs

• Units, rates, extended costs

This supports precise reconciliation and margin analysis.

5) Customers can’t download Azure consumption from the portal—how do I share it?

From the customer’s Subscription in Work 365:

• Click Download Usage Data (CSV/Excel)

• Share securely (upload to portal if enabled, or send via your approved channel)

Configuration Recommendations

A) Billing Contract (per customer, for Azure)

• Frequency: Monthly

• Mode: Arrears (bill prior month after the 15th)

• Scope: Azure usage only (no license lines)

• Auto-Send/Auto-Charge: Optional; enable after your reconciliation SOP is in place

B) Provider / Partner Center Settings

• Override Tolerance: Start low (e.g., 0.5–1.0%)

• Usage Mismatch Tolerance: Keep conservative; document any changes

• Verify Connectivity before every cycle (ensures tokens/consent are valid)

C) Product & Price Setup

• Confirm Azure usage SKUs exist with proper Units (e.g., Monthly) and target markup settings

• If you target a 15% margin, remember this requires ~17.65–17.67% markup on cost (margin ≠ markup)

D) Data Volume & Retention (optional, recommended)

• Consider Condense Usage Summary and Bulk Delete retention policies to control table growth (retain detail as needed for customer audits).

Operational Best Practices

• Bill mid-month (~15th) for the prior month’s Azure usage.

• Separate contracts: Keep Azure usage on its own in-arrears Billing Contract.

• Tight tolerance: Use a small Override Tolerance to surface genuine mismatches early.

• Reconcile routinely: Compare Work 365 totals to Partner Center; investigate variances before posting.

• Enable self-service: Train customers to pull usage reports (if portal feature is enabled).

• Audit trail: Document billing runs, variances, and overrides (invoice #, amount, reason, approver).

End-to-End Monthly Flow (Suggested)

1. 1st–10th: Monitor Partner Center for late usage/credits.

2. By the 12th: Validate tokens/consents (Verify Connectivity), refresh exchange rates (if applicable).

3. 13th–14th: Import/sync usage; spot-check high-variance customers.

4. ≥15th: Run Azure invoice generation for prior month (usage Billing Contracts only).

5. If checksum error:

   • Review variance → reprocess a smaller date range or apply Override Tolerance (document reason).

6. Post-processing: Generate PDFs, email invoices, sync to accounting, auto-charge (if enabled).

7. Archive & report: Save reconciliation notes; optionally export usage CSV for key customers.

Troubleshooting & Variance SOP

Implementation Checklist (Quick Start)

• Create a dedicated Azure Billing Contract per customer (Monthly, arrears).

• Confirm Product & Unit mapping for usage SKUs; verify Azure markup settings.

• Set Override Tolerance (start low) in Partner/Provider configuration.

• Schedule invoice runs after the 15th; align SLAs/customer comms accordingly.

• Publish a customer-facing schedule (“Azure usage billed monthly in arrears after the 15th”).

• Establish a variance SOP: how to investigate checksum errors and when to apply manual overrides.

Common Pitfalls (Avoid These)

• Billing before data stabilizes (1st–10th): leads to re-bills and credits.

• Mixing license & usage on the same contract billed in arrears: obscures reconciliation.

• Aggressive tolerance: masks genuine data issues.

• Unmapped Provider Accounts: usage imports without proper customer linkage.

• Deleting usage detail post-invoice without retention logic: hurts auditability.

Related Articles

• Reasons for the Checksum Error on the Provider Invoice (Override Tolerance, tolerance tuning)

• Manually Downloading a Provider Invoice in Work 365

• Managing Azure Consumption Data in Work 365 (condense usage, retention policies)

• Work 365 – Why Is the Azure Markup 17.67%? (margin vs. markup math)

Summary

Accurate Azure billing hinges on timing, structure, and controls. Bill after the 15th, use dedicated in-arrears Azure Billing Contracts, keep Override Tolerance conservative, and reconcile routinely. These practices deliver complete data, transparent invoices, and fewer corrections—boosting both accuracy and customer confidence.