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An agreement between a seller and a customer to make payments on an account receivable over time.
A payment plan is an agreement between a seller and a customer to make payments on an account receivable over time. This type of arrangement is typically used when a customer is unable to pay the full amount of an invoice or account receivable at once, and needs to make payments in installments over a period of time.
The payment plan outlines the terms and conditions of the agreement, including the amount of each payment, the due date for each payment, and any interest or fees that may apply. The payment plan may also include information about the consequences of missed or late payments, such as additional fees or penalties.
Payment plans can be beneficial for both the seller and the customer. For the seller, a payment plan can help to ensure that they are able to collect the full amount of the account receivable, even if the customer is unable to pay the full amount at once. For the customer, a payment plan can help to make the account receivable more manageable, by allowing them to spread out payments over time.
Payment plans can be used in a variety of different situations, including for larger purchases, ongoing services, or unexpected expenses. They can also be used to help customers who are experiencing financial difficulties, by providing them with a structured plan for repaying their debts over time.
Overall, payment plans can be an effective tool for managing accounts receivable and ensuring timely payment from customers. By providing a structured plan for repayment, payment plans can help to improve cash flow, reduce the risk of bad debts, and maintain positive relationships with customers.