Payment Plan

A payment plan (installment agreement, workout) restructures a past-due balance into scheduled installments the customer can realistically pay: for example, $60,000 past due repaid at $10,000 monthly for six months, possibly alongside terms for new purchases. Plans are the pragmatic middle path between demanding immediate payment a distressed customer cannot make and escalating to an agency or lawsuit that may recover less, later, at greater cost, while ending the trading relationship.

A plan worth signing has structure. Put it in writing with the full balance acknowledged, the schedule, and a default clause accelerating the entire remaining balance if an installment is missed; obtain a down payment as evidence of good faith and commitment; decide explicitly whether new shipments continue and on what terms (many sellers require cash-in-advance or COD for new orders during a workout, so new exposure does not grow while old exposure amortizes); and where leverage allows, use the negotiation to improve position, adding a personal guarantee, a security interest, or a confession-of-judgment provision where enforceable. Interest on the deferred balance is a policy choice, often traded away for a shorter schedule.

Administer the plan like the credit instrument it is: automatic monitoring of each installment, immediate contact on the first miss, and honest bookkeeping about performance. Most workouts either perform from the first payment or fail early; a plan whose first two installments arrive late and short is a liquidation preference dressed up as patience, and each renegotiation typically recovers less than the last. First-default acceleration, actually enforced, protects the seller's place in line among the customer's other creditors.