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A payment arrangement is an agreement between creditor and debtor whereby an outstanding debt is paid in installments instead of all at once. The arrangement includes agreements on the number of installments, the amount of the amounts and the final payment dates. A payment arrangement is usually made when immediate full payment is not possible. The goal is to still collect the debt while preventing further escalation. Compliance with the arrangement is actively monitored.
Within debtor management, a payment arrangement is used to keep arrears manageable. It can be an alternative to debt collection or legal action. Offering arrangements on a structural basis requires clear frameworks to avoid setting precedents.
A customer agrees to pay an outstanding invoice of 12,000 euros in four monthly installments.
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Jimmy Kok | Barentz
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