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How to accept partial payments and offer installment payment plans
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How to accept partial payments and offer installment payment plans

Debit cards, credit cards, cash, money orders, checks, online payments, are all some of the payment options available to consumers today. However, as digital commerce continues to evolve, so do the available payment options and one that’s growing in popularity are payment plans.

Payment plans allow customers and cardholders to make partial payments over a set period of time until the full amount is paid. There are a number of benefits to payment plans, like allowing customers to pay for what they can afford at the time and improving your cash flow by accepting a partial payment upfront.

However, as a business owner, offering payment plans might sound risky, especially if a customer is unable to make payments on the plan. Which begs the question, should you accept partial payments and offer installment plans?

In this article, you will learn:

What are payment plans or installment plans?

A payment plan allows customers to pay for a product or service over a set period of time. Payment plans are a form of customer financing, giving them the opportunity to buy a product or service, even if they can’t afford it upfront.


There are many reasons why customers and businesses choose to use partial payments. Whether a temporary hurdle, like the COVID-19 pandemic, put a dent in the customer’s finances, or maybe a they prefer paying for something expensive over a set period of time rather than all at once.

As a business, you may prefer to receive progress payments to provide working capital through the course of a project. But no matter the situation, repayment plans can help your customers buy your products.

llustration of man on phone, with text “Payment plans allow customers to pay for a product or service over time, even if they can’t afford it upfront.”

Payment plans are also called installment plans, but the way customers pay will sometimes differ depending on the type of contract. In most cases, with payment plans and partial payments, customers can pay whatever amount they can afford, while with installment plans, customers may be required to pay a certain amount on set due dates. Both options are great ways to get paid without the need for numerous invoices.

Is a payment plan a loan?

A payment plan is not a loan, though it does operate similarly as it’s a financing method that a consumer can use to get a product or service. Loans are typically issued by banks, credit unions, and other financial institutions and lenders, so when the financing comes from a business, it’s considered a payment or installment plan.

Installment plans often give customers more freedom to stop making payments in the event that products are defective. However, similar to a loan, if a customer cancels without cause, the company may choose to repossess the product.

Why should a business accept partial payments?

Partial payments have many benefits for both retailers and their customers. By providing more payment options, your customers have more buying power, which can boost sales.

Here are some of the reasons why retailers should begin using installment plans:

Illustration of woman holding boxes, with text “Benefits of using installment plans”

Increased sales

One of the main benefits of accepting partial payments is that it can help boost sales. Partial payments give buyers the flexibility to make regular payments for an expensive purchase, like furniture or a new appliance.

When trying to close a sale on a costly item, the sticker price can make customers second guess their purchase. So, by introducing a payment plans at the beginning of the sale, customers might be more inclined to follow through and make the purchase.

Improved customer loyalty

When customers have more payment options, it can help increase the return rate. By knowing they have multiple payment options, including installment plans, customers may return for future purchases. This can help build brand and customer loyalty, which can give you a competitive edge over other businesses that don’t offer those payment options.

Increases in order value

Payment plans can also increase the total order value, meaning customers will put more items in their cart. A recent study found that consumer financing options led to an increase of 15% on the average order size. Additionally, 93% of first-time payment plan customers said they would use a payment plan again.

Illustration of woman purchasing from store owner, with text “Consumer financing options led to an increase of 15% in customers’ average order size. Source: Bigcommerce.com”

New customers

Depending on the items or services you offer, finding new customers can be challenging, especially if what you're selling is expensive. Offering payment plans can make your products and services affordable and more accessible to your customers, and with a broader pool of customers, you’ll see your revenue increase.

Improved cash flow

To accept payment plans, you can work with a third-party vendor, like QuickBooks. This can help minimize risk, as automatic payments streamline the payment process so you’ll get paid without worry.

With payment plans, you can have a more stable and consistent cash flow, so your business can operate smoothly. Third-party vendors can also help you manage cash flow and calculate key metrics, like accounts receivable turnover ratio. This means that when you set up recurring payments, you can collect payments easily to keep your cash flow in good standing.


There are plenty of benefits that come with accepting payment plans from customers, as it adds value to your business, and makes paying for expensive items and services more convenient for customers, which helps bolster your revenue streams.

Grow Your Business with QuickBooks

How do partial payments and installment payment plans work?

The concept of partial payments and installment payments is simple, customers will make payments towards the cost of a product or service until the total amount has been paid. In most cases, customers will follow a payment schedule with a set due date for when the total amount has to be paid.

Through automatic payments, customers are able to pay for products and services over the agreed upon period time. The details of an installment plan will be outlined in the contract that you and your customer agree on. 

Installment plan example


For example, Jeff owns a small carpentry business, and one day, a customer, Mary, comes in looking for new kitchen cabinets. After going over her kitchen’s details and dimensions, Jeff says it’ll cost Mary $5,000 for new cabinets, this is more than she has at the moment, but she can afford $3,000. 

Jeff introduces her to an installment plan, where she can pay off the remaining $2,000 over one year with a low interest rate of 5%, compounded monthly. While the interest brings her total payment to $2,102, it allows Mary to purchase her new cabinets when she needs them. Mary gets approved for the plan, and with her contract, she agrees to pay $175.17 each month for one year.

Installment payment plan options for small businesses

There are two main ways a business can accept partial payments and installment payments, by managing installment plans within the business, or with the help of a third-party vendor.

By managing payment plans yourself, you’ll be in charge of conducting credit checks, issuing financing, and managing payment collections.

When using a third-party vendor, they'll make credit offers and collect payments. A benefit of using third-party vendors is that they can save you both time and money and help keep you out of legal trouble.

How to accept partial payments with QuickBooks

With a QuickBooks Online subscription, setting up partial payments is easy and comes at no additional cost. To begin invoicing for partial payments, all you have to do is set up a recurring sales receipt and enter the necessary information.


Using QuickBooks to accept partial payments makes it easy to collect late payments, make your products more accessible to customers, and get paid faster.

How to set up installment payment plans for your customers

Setting up an installment plan in QuickBooks is easy:


  1. Select 'New+' and choose 'sales receipt'
  2. Select the customer you want to bill automatically
  3. Select the product or service you want to bill them for on an ongoing basis
  4. Choose a credit card as the payment method and enter the customer’s payment details
  5. Choose 'make recurring' and enter a name for your template
  6. Choose 'scheduled' under the template type
  7. Enter the interval you’ll use as that customer’s payment schedule (such as weekly or monthly)
  8. Enter the start date for automatic billing
  9. Enter how many times you want to charge your customer on that recurring billing schedule
  10. Save your template
  11. Have your customer sign the authorization form to give you permission to automatically charge their credit card


The functionality of recurring payments with QuickBooks makes it easier to collect payments when needed. Depending on the payment agreement, you can collect monthly, quarterly, and annual payments, or even create a custom payment schedule.

Wrapping up

Payment plans are becoming a more popular payment option for both large and small businesses. Accepting partial payments and offering installment plans makes it easier for customers to make larger purchases.

Because of this, companies are able to boost sales, increase customer loyalty, and attract new customers. With QuickBooks, you can set up recurring payment plans and adjust the payment agreement schedule to meet your customers’ needs.


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