Like many things in life, sometimes payments are easier when you break them down. That’s the idea behind instalment payments, which let businesses and their customers break the cost of a product or service into smaller, manageable payments over time.
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This more flexible payment method can be interest-free or include a small fee, depending on the provider or terms. For B2B transactions, instalment payments are especially useful for high-value purchases, offering cash flow advantages for both buyers and sellers.
Instalment payments require an agreement between a buyer and seller to swap an up-front payment for regular partial payment. Here’s how they typically work:
This process is designed to offer flexibility for customers while ensuring the sellers can maintain steady cash flow. In the retail industry, this is usually managed by a third-party payment service provider such as iwocaPay, making large purchases more accessible and financially manageable.
Buyers and sellers can run B2B instalment payments in a variety of ways, depending on the scale and complexity of their sales, including:
For customers who rely on certain materials or services to generate revenue, the ability to spread payments over time allows them more freedom to acquire the assets they need to operate and pay later. Advantages for these businesses include:
Offering B2B instalment payments for your customers is a promising way to increase sales and revenue but managing the process in-house creates extra work to manage and chase payments, as well as the risk of non-payment and bad debts.
Working with a third-party provider can smooth the process, with the provider settling the seller payment directly after the sale, then managing the repayment process from the buyer.
Offering instalment payments can differentiate your business by providing customers with extra flexibility and choice. However, it’s essential to establish set criteria for offering these plans. For example:
It’s also worth remembering that clear refund and dispute policies protect both businesses and customers. Ensure contracts cover refund terms for partially paid purchases and communicate clearly with customers to resolve any issues.
Instant financing, like Buy Now, Pay Later (BNPL), and traditional trade credit both offer payment flexibility but serve different needs. Instant financing provides quick approval with minimal paperwork, often paying sellers the full amount upfront while the provider manages instalment collections. This ensures steady cash flow and reduces the risk of unpaid invoices.
In contrast, traditional trade credit typically requires a formal application and credit checks, leaving sellers to manage payment risks. While it suits established businesses with strong financial records, instant financing appeals to a broader audience, including startups and smaller companies, offering a faster, more accessible solution.
Offering instalment payments can make a real difference for your customers and your business. With iwocaPay, you can provide flexible payment options while keeping your cash flow secure. Your customers can spread their costs, and you receive full payment upfront, with iwocaPay managing the risk and collection process.
Seamless integration: Easily add iwocaPay to your ecommerce or invoicing system, with support for major platforms.
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Yes, in many regions, businesses offering instalment payments must comply with financial regulations and may require specific licensing. For example, in the UK, the Financial Conduct Authority (FCA) regulates consumer credit agreements, which may apply if you offer instalments directly. Partnering with third-party providers like iwocaPay can simplify compliance, as they often handle the necessary licensing and regulatory requirements.
Integrating instalment payment solutions is typically straightforward and varies by provider:
Fees vary depending on the provider and the plan you choose:
Providers like GoCardless and Stripe often offer transparent pricing structures, so it’s essential to review their terms before committing.
This depends on your provider:
Review the provider’s payment terms to choose an option that aligns with your cash flow requirements.
While instalment payments break down the cost of a specific purchase into a set number of payments over a defined period, subscriptions involve ongoing, recurring payments for continuous access to a product or service. Instalments have a clear end date, while subscriptions typically renew automatically unless cancelled, making them ideal for services like software or memberships.
Even though payments are spread out over time, the full revenue from the sale should be recorded once the product or service is delivered. To manage instalments, businesses can use accounting software to track outstanding balances and ensure timely payments. Depending on the arrangement, you can either create partial payments on a single invoice or set up recurring invoices for each instalment. Additionally, any fees from third-party providers should be recorded separately to maintain clear financial visibility.
For B2B businesses who want to get paid instantly while offering flexible payment terms.
For trade customers who want to increase their purchasing power while keeping control of their cashflow.
