Glossary · Collections
Payment plan
Also called Instalment plan, Instalment agreement
A payment plan lets a customer settle an overdue balance in agreed instalments over time, instead of all at once.
A payment plan is an agreement to clear a debt in parts: so much on these dates until the balance is paid. It is how many collectable debts actually get collected, because a customer with a cash-flow problem can often pay in parts what they can’t pay in one go.
Put the plan in writing: the total, each instalment and date, what happens if one is missed (usually, the full balance becomes due), and whether interest or fees accrue while it runs. Keep the plan short — a few months, not a year — and the instalments realistic.
Treat each instalment as a promise to pay and check it on the day. A plan that slips once without follow-up tends to stop entirely.
Example
A client owes €9,000, 75 days overdue, and says it can’t pay in one sum. The supplier agrees three monthly instalments of €3,000, with the remaining balance due at once if any instalment is more than seven days late.