> ## Documentation Index
> Fetch the complete documentation index at: https://docs.getlago.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Arrears vs Advance

> Usage-based charges can be either charged in advance or in arrears

You have the flexibility to define the nature of charges associated with your products or services. Specifically, you can
**determine whether a charge has to be paid in arrears (at the end of the period), or in advance (immediately on event ingestion)**.

## Charges paid in arrears[](#charges-arrears "Direct link to heading")

If you opt for charges to be settled in arrears, they will be invoiced at the end of the billing period based on
the actual usage during that period. This payment option is ideal for usage types like storage, API calls, or compute,
where it is more practical to wait until the end of the period before billing. By default, all charges are configured to be
billed in arrears.

<Tabs>
  <Tab title="Dashboard">
    You can easily manage this billing settings through the user interface. Within the UI, you will find options to customize
    the invoice cadence by setting a charge as invoiced in arrears.

    <Frame caption="Define a charge paid in arrears">
      <img src="https://mintcdn.com/lago/Qjm2ad-IYGtRgG7r/guide/plans/images/charge-in-arrears-1d16763a9e4212018386d79e400eea2a.png?fit=max&auto=format&n=Qjm2ad-IYGtRgG7r&q=85&s=f02e926be97cdc43c30c16af8fb59d33" width="1638" height="1200" data-path="guide/plans/images/charge-in-arrears-1d16763a9e4212018386d79e400eea2a.png" />
    </Frame>
  </Tab>

  <Tab title="API">
    Define `pay_in_advance : false` on a charge to bill it in arrears:

    <CodeGroup>
      ```bash Define a charge as paid in arrears {16, 22} theme={"dark"}
          LAGO_URL="https://api.getlago.com"
          API_KEY="__YOUR_API_KEY__"

          curl --location --request POST "$LAGO_URL/api/v1/plans" \
          --header "Authorization: Bearer $API_KEY" \
          --header 'Content-Type: application/json' \
          --data-raw '{
            "plan": {
              "name": "Premium",
              "code": "premium",
              "interval": "monthly",
              "description": "Premium plan for SMB companies",
              "amount_cents": 50000,
              "amount_currency": "USD",
              "trial_period": 0.0,
              "pay_in_advance": true,
              "bill_charges_monthly": true,
              "charges": [
                {
                  "billable_metric_id": "1111_2222_3333_4444",
                  "charge_model": "percentage",
                  "pay_in_advance": false,
                  "invoiceable": true,
                  "min_amount_cents": 100,
                  "properties": {
                    "rate": "0.5",
                    "fixed_amount": "1",
                    "free_units_per_events": 3,
                    "free_units_per_total_aggregation": null
                  }
                }
              ]
            }
          }'
      ```
    </CodeGroup>
  </Tab>
</Tabs>

## Charges paid in advance[](#charges-advance "Direct link to heading")

With this payment option, charges are invoiced immediately upon any changes in usage. It is particularly useful for scenarios
where you need to bill customers instantly for usage-based actions, such as new user seat or integrations.

<Tabs>
  <Tab title="Dashboard">
    You can easily manage this billing settings through the user interface. Within the UI, you will find options to customize
    the invoice cadence by setting a charge as invoiced in advance.

    <Frame caption="Define a charge paid in advance">
      <img src="https://mintcdn.com/lago/Qjm2ad-IYGtRgG7r/guide/plans/images/charge-in-advance-5a13fc011d78a058f7767519c5817961.png?fit=max&auto=format&n=Qjm2ad-IYGtRgG7r&q=85&s=202c052d2e37b9188690dadb864e2973" width="1638" height="1194" data-path="guide/plans/images/charge-in-advance-5a13fc011d78a058f7767519c5817961.png" />
    </Frame>
  </Tab>

  <Tab title="API">
    Define `pay_in_advance : true` on a charge to bill it in advance:

    <CodeGroup>
      ```bash Define a charge as paid in advance {16, 22} theme={"dark"}
      LAGO_URL="https://api.getlago.com"
      API_KEY="__YOUR_API_KEY__"

      curl --location --request POST "$LAGO_URL/api/v1/plans" \
      --header "Authorization: Bearer $API_KEY" \
      --header 'Content-Type: application/json' \
      --data-raw '{
        "plan": {
          "name": "Premium",
          "code": "premium",
          "interval": "monthly",
          "description": "Premium plan for SMB companies",
          "amount_cents": 50000,
          "amount_currency": "USD",
          "trial_period": 0.0,
          "pay_in_advance": true,
          "bill_charges_monthly": true,
          "charges": [
            {
              "billable_metric_id": "1111_2222_3333_4444",
              "charge_model": "percentage",
              "pay_in_advance": true,
              "invoiceable": true,
              "min_amount_cents": 100,
              "properties": {
                "rate": "0.5",
                "fixed_amount": "1",
                "free_units_per_events": 3,
                "free_units_per_total_aggregation": null
              }
            }
          ]
        }
      }'
      ```
    </CodeGroup>
  </Tab>
</Tabs>