Flight school billing is harder than it looks, and the reason is structural: you are selling two products at once, on two different clocks, at rates that depend on facts nobody knows until after the flight has landed. A restaurant knows the price of the meal before it cooks it. You do not know the price of a lesson until the aircraft is tied down and someone has read a number off the panel.

Almost every billing problem a flight school has traces back to that. This guide covers the decisions that matter, the traps that produce the phone calls, and the reconciliation discipline that keeps your books honest — whichever system you run it in.

Should you bill on Hobbs or tach?

This is the first decision and the one that quietly sets your revenue.

Hobbs runs on oil pressure or a squat switch — roughly, engine-running time. Tach time accumulates in proportion to engine RPM, and is calibrated to run at real time only at cruise power. On a training flight full of taxi, run-up, pattern work and low-power descents, tach time runs meaningfully slower than Hobbs — commonly 15 to 25% slower, and more on a busy field with long taxi times.

Neither is more correct. What matters is that the choice is consistent across three things:

1. What you bill on.
2. What you set your rate from. A tach rate has to be higher than a Hobbs rate to produce the same revenue per flight. Schools that switch from Hobbs to tach without raising the rate take an immediate 15–20% revenue cut and often do not notice for a quarter.
3. What you track maintenance against. Most inspection intervals are tach- or calendar-based; some are Hobbs. If you bill on one clock and track airworthiness on the other, both numbers have to be captured on every flight — not derived from each other.

The practical answer for most training operations: bill Hobbs because students understand it and it matches the time the aircraft was unavailable to anyone else, and track maintenance on tach because that is what the manufacturer specified. Capture both, every flight, with no exceptions. A system that only records one is storing up an expensive reconstruction.

What about wet and dry rates?

A wet rate includes fuel; a dry rate does not, and the renter buys fuel and gets reimbursed. Wet is simpler and is what almost every school should do. Dry only makes sense for long cross-countries where fuel prices away from base would otherwise wreck your margin — and if you do it, the reimbursement has to appear on the invoice as a credit line, not as a cash refund at the desk. Cash at the desk is how schools lose the audit trail.

If you fly wet, revisit the rate whenever fuel moves more than about 10%. A wet rate set at $4.80 fuel and never touched is a slow leak.

What instructor time should you actually charge for?

Instructor billing is where most schools leak money, and it is almost never deliberate. It leaks because the flight is obvious and everything around it is not.

Decide explicitly, write it down, and put it in front of students at enrolment:

• Pre-flight brief and post-flight debrief. These are instruction. Most schools bill them; many schools bill them only when the instructor remembers to log them, which is the same as not billing them.
• Ground instruction. Usually a separate, lower rate. It still needs to be logged the same day.
• Weather cancellations. If the student showed and the instructor briefed, that is billable ground time. If nobody showed, see the no-show policy below.
• Time waiting for an aircraft. Your call — but make it a policy, not a per-instructor judgment call, or you will have three different answers for the same situation.
• Stage checks and checkride prep with a different instructor. Make sure the pay routing follows the instructor who did the work, not the student's assigned CFI.

The structural fix is to make instructor time part of closing out the flight rather than a separate act of remembering. If logging brief and debrief is one extra field on a form the CFI already has to complete, it gets logged. If it is a separate screen, it does not.

How should prepaid blocks and account credits work?

Prepaid blocks — a student pays $5,000 up front, or buys 10 hours at a discounted rate — are excellent for cash flow and are the single most common source of billing disputes. Two things go wrong.

Dollar blocks versus hour blocks

A dollar block is simple: money on account, drawn down at whatever the current rate is. If your rates rise, the block buys fewer hours, and students understand that if you told them at the time.

An hour block is a rate guarantee. Ten hours in N12345 at today's price, whatever the price is when they fly it. That is a genuine commitment you have made, and it has to be honoured per aircraft — an hour block on a 172 cannot be drawn down against a complex aircraft at the same rate. Systems that treat hour blocks as generic hours will silently give away the rate difference, and it is invisible until someone audits a year of invoices.

The order of operations

When an invoice is settled against a prepaid balance and a discount and a card payment, the order matters and must be the same every time. Get this wrong and you will produce invoices that do not add up.

The order that works: compute the charge → apply discounts → apply prepaid hours at their guaranteed rate → apply account credit → charge the remainder. Discounts before prepaid, because otherwise you burn the student's guaranteed-rate hours on a discounted flight and hand them the discount twice.

The rule that keeps the books honest

Whenever money moves, three things must change together:

1. The transaction ledger gets a row.
2. The invoice reflects it.
3. The account balance reflects it.

Any process that updates one or two without the third — a manual balance adjustment, a "mark as paid" button that does not post a ledger row, a refund handled outside the system — will produce a discrepancy that gets harder to unwind every month it survives. If you take one thing from this guide, take that one. Most flight school books that cannot be reconciled were broken by a well-intentioned manual correction.

What cancellation and no-show policy actually works?

A cancellation policy has one job: to make the slot recoverable. If a student cancels with 24 hours' notice you can usually refill the aircraft, and there is nothing to charge for. If they cancel at 30 minutes, the aircraft and the instructor are both idle and that is a real loss.

A policy that works in practice has four parts:

• A clear cutoff — commonly 24 hours, sometimes 12 for a school with a strong waitlist.
• A fee that is a fixed amount or a capped percentage, not "the full flight." Charging a student two hours of aircraft time for a flight that never happened generates a dispute you will lose, and often loses the student.
• A weather exception that a named person applies, not the student. Below-minimums is a cancellation nobody owes for; "I didn't like the look of it" is a judgment call, and judgment calls need one owner or your policy is whatever each instructor decides.
• A waitlist that is actually notified. A cancellation fee is compensation for a slot you could not refill. If your system does not tell the waitlist a slot opened, you are choosing the fee over the revenue, and the revenue is bigger.

The corresponding control: the fee amount should come from the policy, not from whoever is cancelling the booking. If any user can type a number into a cancellation fee field, that number will eventually be wrong — in both directions.

Can you pass card fees on to students?

Sometimes, and the details matter. In the United States, card surcharging is permitted by the major card networks under specific conditions — disclosure at the point of entry and at the point of sale, a cap tied to your actual cost of acceptance, and advance notification to the networks — and it is restricted or prohibited outright in a handful of states. Debit card surcharging is not permitted. Rules change; check your current state law and your processor's own terms before you switch it on.

Two implementation points that cause real accounting damage regardless of legality:

• A surcharge is revenue you collected and paid straight to the processor. It is not margin, and it should not appear in your revenue reporting as though it were.
• A surcharge must never be treated as payment toward the invoice. If a student owes $200 and pays $206 with a 3% surcharge, the invoice is settled at $200 and $6 is a fee. A system that credits the full $206 against the balance will show $6 of phantom credit on every card payment — small individually, and thousands over a year.

The cleaner alternative many schools prefer: no surcharge, a modest discount for ACH or account payment, and card pricing baked into the rate. Same economics, no compliance surface, no line item to argue about.

How do leaseback owner payments work?

If any of your fleet is on leaseback, you are running a second billing system inside the first one, and it has a different customer: the owner.

The mechanics that need to be right:

• The split basis. A percentage of gross revenue on that tail, or a fixed hourly rate to the owner. Gross-revenue splits are more common and require agreement on what counts as gross — before or after discounts, and whether a cancellation fee on that aircraft is shared.
• What comes off the top. Fuel, oil, scheduled maintenance, unscheduled maintenance, insurance, hangar. Every one of these needs a stated owner: you or them.
• The statement. Owners should get a monthly statement itemising every flight on their tail, the revenue, the deductions and the net. This is the document that keeps a leaseback relationship healthy, and producing it by hand is why so many schools produce it late.
• Voiding. A statement that goes out wrong needs a defined correction path — void and reissue, with both documents retained. Editing an issued statement in place is how a disagreement becomes unresolvable.

What does a clean month end look like?

Month end is the check that everything above worked. It should be a checklist, not an investigation. If it routinely takes more than half a day, something upstream is broken.

1. Every flight is closed out. Search for reservations that completed without a flight record. This is the single biggest source of unbilled revenue in a flight school — a flight flown, an aircraft used, and no invoice line anywhere.
2. Every flight has both clocks. Hobbs and tach, on every record, with no zeros and no impossible values. A tach reading lower than the previous flight's is an entry error, and it corrupts maintenance tracking as well as billing.
3. Instructor time is logged. Compare instructor hours logged against flights flown. A CFI with 40 flight hours and 6 hours of ground for the month is not billing brief and debrief.
4. Ledger, invoices and balances agree. The sum of ledger movements should equal the change in account balances, and open invoices should equal outstanding receivables. If they do not, find the manual adjustment — it is almost always a manual adjustment.
5. Prepaid liability is stated. Unused prepaid dollars and hours are money you owe as service, not revenue you have earned. Know the number.
6. Owner statements out. Same date every month.
7. Aging reviewed. Anything over 30 days gets a name against it and a call, this week rather than next month.

What are the failure modes to watch for?

In rough order of how much they cost the schools we see:

• Flights flown and never billed. Almost always a close-out that did not happen. Look for it monthly.
• Instructor ground time never captured. Silent, constant, and often larger than the unbilled flights.
• Rates changed on the aircraft but not on the open invoices. Decide whether a rate change applies to bookings already made, and be consistent.
• Manual balance adjustments with no ledger row. The reason your books do not reconcile.
• Prepaid hours drawn at the wrong rate or against the wrong aircraft. Invisible until someone checks a year of them.
• Refunds processed outside the system. Cash or a card refund at the terminal, never recorded. Every one of these is a permanent discrepancy.
• Discounts applied twice — once as a rate override and once as a discount line.

Every item on that list has the same shape: a fact that lives in one person's head or one system's screen and does not propagate. The fix is the same too — make the correct action the easy action, and make the easy action write everything it needs to write.

The short version

Pick one clock and set your rate from it. Capture both clocks on every flight anyway. Bill instructor time as part of closing out the flight, not as an act of memory. Apply discounts before prepaid and prepaid before credit, in that order, every time. Never move money without writing a ledger row, an invoice change and a balance change together. Make your cancellation fee a policy, not a text field. Send owner statements on a schedule. And treat month end as seven checks that should pass, not as a search for what went wrong.

Get those right and the billing stops being the thing you dread and goes back to being what it should be: an accurate record of work you already did.

Flight Suite HQ handles all of the above — dual Hobbs and tach capture, dollar and hour blocks at guaranteed per-aircraft rates, instructor pay, leaseback owner statements, and a ledger that will not let an invoice, a balance and a transaction disagree — in the base price, at $15 per aircraft per month plus $0.50 per active user. If you are weighing options, our comparison page lists what every other platform in the category charges.