Instalment Agreement Template
An instalment agreement turns a lump-sum debt into a fixed schedule of smaller payments — useful when a customer can pay, just not all at once.
What's included
- Understand when an instalment agreement is the right tool
- Set a clear, dated schedule the customer can actually meet
- Record acknowledgement of the debt up front
- Provide for default and acceleration of the balance
- Know when to have the agreement reviewed
7 min read
The template
This general template converts an agreed debt into fixed instalments. Replace each [placeholder] and delete what does not apply.
INSTALMENT AGREEMENT
Parties: [Creditor] ABN [ABN] and [Debtor] ABN/ACN [number]
Date: [Date]
1. The debt
The Debtor owes the Creditor [$total] ('the Amount'), being
[describe — e.g. unpaid invoices [numbers]], which the Debtor
acknowledges is due and not in dispute.
2. Instalments
The Debtor will pay the Amount by [number] instalments of
[$instalment] each, on the [day] of each month, starting
[start date], with any final adjusting instalment of [$amount]
on [final date].
3. Method
Payments to [BSB/account], reference [reference]. Time is of the
essence.
4. No further interest / interest
[Choose: No further interest accrues while payments are met /
Interest continues at [rate]% pa per the underlying terms.]
5. Default
If an instalment is [number] days late, the unpaid balance of the
Amount becomes immediately due and payable.
6. Whole agreement
This records the entire agreement about the Amount.
Signed: ______________ (Creditor) ______________ (Debtor)How to use it
Size the instalments to the customer's real cash flow and keep the schedule short enough that you are not carrying the risk for months on end. State plainly whether interest is paused or continues, because silence on that point causes disputes later. File the signed agreement and tick off each payment as it lands. If you are still negotiating the headline terms, the free Payment Terms Generator is a quick way to model periods and rates.
Not legal advice
This is a general template and general information only — not legal advice. Whether an instalment agreement suits your situation, and how it should be worded, depends on your contract and the facts. Have it reviewed by a lawyer before you use it.
Tips
- Instalment agreements suit customers who can pay over time, not at once.
- Record the acknowledgement of debt before the schedule.
- Be explicit about whether interest is paused or continues.
- Include acceleration so the balance falls due on default.
FAQ
How is this different from a payment arrangement?
They overlap. An instalment agreement is typically a fuller document with a fixed schedule; an arrangement can be shorter and more informal. Use whichever fits the account.
Should time be 'of the essence'?
Including that phrase signals that dates matter and supports acceleration on default, but its effect depends on the contract. This is general information, not legal advice.
Can I take a guarantee as well?
Yes — for higher-risk accounts a director's guarantee is common. See the separate guarantee templates and have them reviewed.
Templates are a head start — not legal advice
Customise to your business and have important documents reviewed. Need to recover a debt? We can help.