What is a Deferred Payment Arrangement

A deferred payment is an arrangement in which a person receives the rights to pay his debts until a certain period of time. The debt is created when a person purchases a product or avails any service, and agrees to pay the cost in the future.

The amount for the debt is called deferred for the time period decided in the arrangement, and completely depends on the payment schedule. In some cases, full payment is required to be made until the decided date. One can also pay the full amount in different instalments, depending on the terms of contract made between the parties involved in the transaction.


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    Interest on deferred payments

    In some cases, the seller or service provider charges some interest on the deferred payment. The interest can be applied on the complete payment right after the arrangement is made, or after a certain period of time.  Many businesses do not apply any interest on the deferred payments, just to maintain healthy relationship with the customers.

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    Deferred payment, a common sales tool used in businesses

    Deferred payment plan is considered as a strong sales and marketing tool, as it can attract a number of customers to purchase company’s products and services. The main concept behind deferred payment plan is to allow the customers to take home the product they need and make the payment on a later date.

    Sometimes it happens that a customer is in need of a product and does not have the budget to pay the cost right away. In such case, they are allowed to avail the deferred payment plan. Many companies offer such plans to their preferred or old customers only, while others offer such service to everyone.

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    Qualification criteria to avail the deferred payment options

    Companies do not just sale out their products and services and allow the customers to pay the amount on a later date without any criteria. In fact, almost all the companies set some qualification criteria for the customers to avail deferred payment options.

    For instance, if a customer has a longstanding relationship with the company and also holds a perfect record when it comes to making payments at time, then he/she has a good chance of availing such offers. On the other hand, new customers will have to go through different evaluations before they get any deferred payment arrangement.

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