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Payment Terms
Payment Plan
Definition
An agreement allowing a customer to pay for a purchase in multiple installments.
Overview
Payment plans make large purchases more accessible by spreading costs over time. They require clear terms about amounts, dates, and consequences of missed payments.
Example
A $12,000 project paid in 6 monthly installments of $2,000.
Best Practices
Define installment amounts, dates, and late payment policies. Consider interest for extended plans.
Common Mistakes to Avoid
No written agreement
Missing late payment terms
Not tracking payments
Frequently Asked Questions
Should I charge interest on payment plans?
Optional, but common for longer plans. State terms upfront.