Payment Arrangement Agreement Template
When a customer cannot pay an overdue account in one go, a short written arrangement records what they have agreed to pay and by when — so both sides know where they stand.
What's included
- Understand what a payment arrangement agreement does and does not do
- Capture the amount, instalments and dates in writing
- Set out what happens if the customer falls behind again
- Keep the tone firm, factual and professional
- Know when to have the document reviewed before use
7 min read
The template
This is a general template for recording an agreed catch-up arrangement on an account that is already overdue. Replace every [bracketed placeholder] with your own details and delete anything that does not apply.
PAYMENT ARRANGEMENT AGREEMENT
Between: [Creditor legal name] ABN [ABN] ('we', 'us')
And: [Debtor legal name] ABN/ACN [number] ('you')
Date: [Date]
1. Outstanding amount
You owe us [$amount] as at [date], being the unpaid balance of
invoice(s) [invoice numbers] ('the Debt').
2. Arrangement
You agree to pay the Debt by the following instalments:
- [$instalment] on [date]
- [$instalment] on [date]
- [final $instalment] on [date]
Payments to: [BSB] [account number], reference [reference].
3. Acknowledgement
You acknowledge the Debt is due and payable and is not in dispute.
4. While the arrangement is on foot
Provided you keep to it, we will hold any further recovery action.
5. If you fall behind
If any instalment is more than [number] days late, the whole
remaining balance becomes immediately due and we may resume
recovery without further notice.
Signed for the Creditor: ____________ Name/Title: [name]
Signed for the Debtor: ____________ Name/Title: [name]How to use it
Confirm the exact balance and the invoices it relates to before you send anything. Set instalment dates that are realistic — an arrangement that collapses in week two is worse than no arrangement at all. Keep the signed copy with the account file, and diarise each due date so a missed payment is picked up quickly. If you need to settle on the underlying terms first, the free Payment Terms Generator can help you draft those.
An arrangement is a practical promise to pay, not a release of the debt. If it fails and the account needs to be escalated, you can refer the debt with the arrangement and payment history attached as evidence of the customer's acknowledgement.
Not legal advice
This is a general template and general information only — it is not legal advice. Whether an arrangement is appropriate, how it should be worded, and how it interacts with your terms of trade depends on your contract and your circumstances. Have it reviewed by a lawyer before you rely on it.
Tips
- A written arrangement records what was agreed and when payment is due.
- Include an acknowledgement that the debt is not in dispute.
- Spell out what happens if an instalment is missed.
- It is a promise to pay, not a release of the debt.
FAQ
Is a payment arrangement legally binding?
A clear, signed arrangement supported by the underlying debt is generally intended to bind, but enforceability depends on the facts. This is general information, not legal advice.
Should I stop charging interest during the arrangement?
That is a commercial choice. Some creditors pause interest as an incentive; others keep it running per their terms. Decide before you sign and state it clearly.
What if the customer breaks the arrangement?
A well-drafted clause makes the whole balance fall due so you can resume recovery. Keep the signed document and the payment record either way.
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.