Payment Plan Calculator

Last reviewed 16 October 2026

Work out the installment amount, the total cost and the full schedule for any payment plan, weekly to quarterly, with or without interest.

A payment plan splits one balance into scheduled installments. Take off any down payment, then divide the rest across the installments, adding interest per period if the plan charges it.

Example: a $12,000 invoice with $2,000 down, over 12 monthly installments at 6 percent a year. The financed amount is $10,000, so the payment is $860.66 a month, and total interest is $327.96.

Plan details

Everything updates as you type. Nothing is sent anywhere.

Total amountThe invoice or balance the plan covers.

Enter a total above zero.

Down paymentOptional. Paid before the installments start.

The down payment must be less than the total.

Number of installments

Enter between 1 and 600 installments.

Payment frequency

Annual interest rateLeave at 0 for an interest free plan.

Enter a rate between 0 and 100 percent.

First payment date

Enter a valid first payment date.

Payment schedule

Each row shows how much of the payment clears principal, how much is interest, and what is left. The final payment is adjusted to clear the balance exactly.

#	Due	Payment	Principal	Interest	Balance

Estimates using the standard amortization formula. Taxes, plan fees and late payment charges are not included.

Key takeaways

A payment plan splits one balance into scheduled installments, in writing, with dates and amounts.
Zero interest plan: payment = financed amount divided by the number of installments.
The rate in the amortization formula is the rate per period, not the annual rate.
Plans of six months or less get paid. Longer plans get renegotiated.
A down payment is the cheapest test of whether a customer intends to pay.

Payment per month

$860.66

06 mo12 mo24 mo+

12 monthly installments is a standard business plan length.

Financed after down payment$10,000.00

Total interest$327.96

Total repaid, including down$12,327.96

Plan duration12 months

Last payment due--

Each payment, share of total7.2%

A plan only works if it collects itself

Paidnice runs customer payment plans end to end in Xero and QuickBooks.

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What a payment plan actually decides

A payment plan is not a discount and it is not a write off. It is a decision to be paid in full, more slowly, in exchange for being paid at all.

For a business, that decision usually arrives on one invoice a good customer cannot pay this month. The options are narrow:

Insist on the full amount. You risk the relationship and possibly the money.
Send it to collections. Recovery on commercial debt is a fraction of face value once fees come out, and the customer is gone.
Break it into installments. You keep the account and take the cash over three to twelve periods instead of one.

The same arithmetic runs the consumer side. A purchase split over weekly payments, a layaway on goods held until the last payment, a tax installment agreement: each is one balance divided by a number of periods, with or without a rate per period.

What changes is the principal, the rate, the number of installments and how often they fall due. The formula does not change at all.

The quick version. Take the down payment off the total, then divide what is left by the number of installments. If the plan charges interest, apply the rate to the balance each period and the payment rises a little.

The formula, part by part

Most business payment plans charge no interest at all, and those need nothing more than Payment = P / n: the financed amount divided by the number of installments. Once a rate is attached, the standard amortization formula takes over: Payment = P x [ r(1+r)^n / ((1+r)^n - 1) ]. Four inputs, and three of them are commonly entered wrong.

P, the financed amount

The total minus any down payment, not the total. A 12,000 dollar invoice with 2,000 down finances 10,000. Getting this wrong is the most common error, and it overstates every payment in the schedule.

r, the rate per period, not per year

Divide the annual rate by the number of payments a year: 12 for monthly, 26 for fortnightly, 52 for weekly, 4 for quarterly. Six percent a year on a monthly plan is 0.005 per period. Feeding the annual rate straight in produces a payment roughly twelve times too punishing.

n, the number of installments

The count of payments, not the number of months. Twenty six fortnightly payments is one year, not twenty six. Match n to the same period as r or the answer is meaningless.

The zero interest case

When r is zero the formula divides by zero, so it does not apply. Use Payment = P / n instead. Most short business plans are zero interest, so this is the branch that runs most often.

A worked example

A supplier agrees to let a customer clear a 12,000 dollar invoice over 12 monthly installments at 6 percent a year, with 2,000 dollars paid up front.

Financed amount: 12,000 - 2,000 = $10,000
Rate per period: 6% / 12 = 0.005
Compounding factor: 1.005 to the power of 12 = 1.0616778
Payment: 10,000 x (0.005 x 1.0616778) / (1.0616778 - 1) = $860.66 a month
Total of installments: 860.66 x 12 = $10,327.97, so total interest is $327.96
Total the customer pays: 10,327.97 + 2,000 down = $12,327.96

The first payment carries 50 dollars of interest, because 10,000 x 0.005 is 50, and 810.66 of principal. By the final payment almost all of it is principal. That is the whole shape of an amortization schedule: the interest share falls every period as the balance falls.

The same plan at zero percent

Drop the rate to zero and the payment becomes 10,000 / 12, or 833.33 a month, and the customer pays exactly 12,000. The 6 percent version costs them 327.97 more. That gap is what you price when you decide whether to charge interest, and on a plan this short it is rarely worth the conversation.

How to read your number

The payment amount matters less than the plan length. Length is what determines whether the plan gets paid, because a longer plan means more chances for the customer's circumstances to change.

Up to 3 months

Short recovery

A cash timing problem, not a credit problem. Zero interest, minimal admin, low default risk.

3 to 6 months

Standard business plan

The normal shape for a large invoice. Usually zero interest, usually with a down payment.

6 to 12 months

You are financing them

Your working capital is funding their purchase. Price it, take a deposit, document it properly.

Over 12 months

This is a loan

Raises licensing, interest rate and documentation questions in most jurisdictions. Take advice first.

Test the length against the size of each payment too. If an installment is more than about a fifth of what the customer normally spends with you in a period, the plan is asking for a behavior change rather than a schedule, and it will break.

Common plans at a glance

The same formula governs every one of these. Seeing them side by side is the fastest way to build a feel for what rate and term do to a payment.

Scenario	Amount	Rate	Term	Payment	Total interest
B2B invoice plan, interest free	$5,000	0%	6 mo	$833.33	$0.00
B2B plan with a finance fee	$10,000	8%	24 mo	$452.27	$854.55
Tax installment agreement	$8,000	7%	12 mo	$692.21	$306.57
Personal loan, good credit	$15,000	12%	36 mo	$498.21	$2,935.75
Auto loan, new vehicle	$25,000	6%	60 mo	$483.32	$3,999.23
Credit card payoff	$5,000	22%	24 mo	$259.39	$1,225.38

Each row computed with the standard monthly amortization formula, payment rounded to the cent, interest taken as the rounded payment across the term less the principal. Illustrative amounts and rates, not offers.

The same principal produces wildly different totals depending on rate and term, which is exactly why the calculator above beats a rule of thumb.

Typical interest ranges by plan type

Plan type	Typical annual rate	Notes
B2B customer payment plan	0 to 8%	Usually 0% on plans under six months, to protect the relationship
Early payment discount, implied	18 to 37%	The cost the buyer pays by not taking 1/10 or 2/10 Net 30
US tax installment agreement	Set quarterly	Federal short term rate plus 3 points, plus penalties
Personal loan, good credit	6 to 12%	Unsecured, priced on credit score and term
Credit card balance	18 to 30%	Higher again on cash advances and penalty rates
Auto loan, new, good credit	4 to 8%	Secured against the vehicle

Compiled from published lender and card issuer rate disclosures and from the US federal underpayment rate rule at Internal Revenue Code section 6621, which sets the tax installment rate as the federal short term rate plus 3 percentage points, adjusted quarterly. Reviewed October 2026. Orientation only, not quotes, and rates move. Check the current figure before you put one in an agreement.

The two calculations, and which one you need

Most calculators only answer the first of these. The second is the one that actually comes up in a negotiation.

You know	You want	Method
The number of installments	The payment amount	Amortization formula, or PMT in a spreadsheet
What the customer can pay	How many installments it takes	Solve for n, or NPER in a spreadsheet

Solving for the count is the honest way to structure a plan. The customer already knows what they can afford each month and is usually reluctant to say it first. Ask the number, put it in, and the schedule tells you both whether the answer is six installments or twenty six.

On a zero interest plan it is the balance divided by the payment. With interest, the payment has to exceed the interest charged in the first period or the balance never falls, which the calculator flags rather than returning a nonsense answer.

The trap in longer plans. Halving the payment always more than doubles the interest, because the balance stays high for longer and interest is charged on the balance. A longer plan is not a smaller cost, it is the same cost spread thinner plus a premium for the extra time.

Should you offer a customer a payment plan?

Offer one when the customer has paid reliably before and the real alternative is collections. Decline when they have already broken a plan, or when nothing visible is funding the installments.

When it makes sense

The customer has paid on time before and is dealing with a temporary cash problem with an identifiable cause.
The invoice is large relative to their normal spend with you, so paying it in one go was never realistic.
The real alternative is collections or a write off, not full payment next week.
The account is worth more over the next two years than this one invoice is worth today.

When to decline

They have already broken a payment plan with you. A second plan is a slower write off.
There is no visible revenue source funding the installments, only an intention.
The invoice is in dispute. Settle the dispute first, then plan the agreed amount.
The plan would strain your own working capital. Run it against your DSO and cash conversion cycle before you agree.

Setting the terms

Take a down payment. Ten to thirty percent up front is normal on a first plan. It reduces your exposure and it is the cheapest available test of whether the customer intends to pay.
Match the frequency to their cash cycle. A business paid weekly by its own customers can service a weekly plan comfortably and will struggle with a large monthly one.
Keep it under six months if you can. Short plans get paid. Long plans get renegotiated.
Decide about interest up front. Zero percent under six months, 4 to 8 percent beyond that to cover your own cost of capital, and nothing above that unless you are genuinely in the lending business.
Put it in a signed agreement. The schedule, the late fee, the grace period and an acceleration clause making the whole balance due after two missed payments. Most plan disputes come from unclear terms, not disagreement.
Automate the collection. Manual tracking is where plans go to die. Paidnice payment plans issue each scheduled invoice, remind before each due date and flag a missed payment on the day it happens.

What pushes the total cost the wrong way

Almost every avoidable cost in a plan comes from stretching the term or pricing it badly.

Stretching the term to hit a payment number. Agreeing to 24 months because 500 a month sounded manageable roughly doubles the interest.
Pricing the rate for the risk instead of your cost of capital. If the risk needs a high rate, the answer is a bigger down payment or no plan.
Adding a setup fee without stating it. A fee changes the effective rate, and one that is not in the schedule gets argued about later.
Restarting a plan after a missed payment. Re-amortizing the balance over the original term extends the plan and adds interest neither side priced.
Ignoring the cash you are not collecting. Ten thousand dollars over twelve months is roughly five thousand of average balance you fund all year.

How to make a payment plan actually get paid

Plans fail in the tracking, not in the arithmetic. Eight steps keep one on schedule.

Get the down payment before you issue the schedule. Nothing else confirms intent as reliably.
Send the full schedule with dates and amounts. Both sides should be able to see every payment, not just the next one.
Invoice each installment separately. A dated invoice enters their accounts payable process. A line in an email does not.
Remind before each due date, not after. Automated email and SMS reminders move the installment into the current payment run rather than the next one.
Send a statement showing the remaining balance. Automated statements keep the total visible, which matters more than any single installment.
Act on the first miss, on the day. One missed payment that gets a same day message is usually an oversight. One that gets three weeks of silence is the start of a default.
Charge the stated late fee. Automated late fees keep the consequence consistent and impersonal, which is exactly what a plan needs.
Review open plans against the aging. AR reporting shows which plans are slipping while the balance is still collectable.

Want the plan to run itself?

Paidnice Payment Plans handles proposal, acceptance, scheduled invoices, reminders and default handling inside Xero and QuickBooks.

See payment plans

Calculating a payment plan in Excel

Excel and Google Sheets have the whole formula built in. Rate goes in first, and it must be the rate per period.

Payment, 10,000 at 8 percent over 24 monthly: =PMT(0.08/12, 24, -10000) returns 452.27
Number of installments if you can pay 500 a month: =NPER(0.08/12, -500, 10000)
Zero interest plan: =10000/12, no PMT needed
Interest inside payment number 3: =IPMT(0.08/12, 3, 24, -10000)
Principal inside payment number 3: =PPMT(0.08/12, 3, 24, -10000)
Total interest across the plan: =PMT(0.08/12,24,-10000)*24-10000
Next monthly due date from a first payment in A2: =EDATE(A2,1)
Next fortnightly due date: =A2+14

Why the negative sign. Spreadsheet finance functions treat money paid out and money received as opposite signs, so entering the principal as a negative makes PMT return a positive payment. Without it the answer is right but reads as minus 452.27.

Payment plans against related tools

A plan answers what the installments are. These four answer the questions on either side of it.

Tool	Question it answers	Output
Payment plan	What are the installments and what does the plan cost	A schedule
Net 30	When was this invoice due in the first place	A date
Late payment interest	What is owed on the overdue balance right now	Interest amount
Bad debt expense	What to provide for if the plan fails	Provision and journal
Invoice factoring	What selling the receivable costs instead	Effective cost

The comparison worth making before you offer a plan is against factoring. A plan costs you the time value of the money and the default risk. Factoring costs a fee but hands you the cash now.

If the invoice is large and your own cash is tight, run both numbers before you commit to waiting six months.

Common mistakes

Using the annual rate as the period rate. Produces a payment about twelve times too high on a monthly plan, and it is always the first thing to check when a result looks absurd.
Financing the full total when a down payment was taken. Every row in the schedule is then wrong.
Counting periods instead of payments. Twenty six fortnightly payments is one year, not twenty six.
Agreeing a plan without a written schedule. The schedule is the agreement. An email saying about 800 a month is not.
No acceleration clause. Without one, a customer who stops paying at installment four leaves you chasing eight separate small amounts on their original dates.
Leaving the plan to be tracked manually. Plans fail between the calendar and the accounting system, not in the arithmetic.

Businesses on Xero and QuickBooks can run the whole arrangement automatically, from the proposal through to the missed payment notice, with Paidnice payment plans.

Frequently asked questions

How do you calculate a payment plan?

Subtract any down payment from the total to get the financed amount, then divide by the number of installments for a zero interest plan. With interest, use the amortization formula: Payment = P x r(1+r)^n / ((1+r)^n - 1), where P is the financed amount, r is the rate per period and n is the number of payments. Convert an annual rate to a period rate by dividing by the payments per year.

What is a payment plan?

A payment plan is a written arrangement to settle one total in scheduled parts instead of one payment. In business it usually means letting a customer clear a large invoice over three to twelve installments rather than writing it off or sending it to collections. The plan sets the amount, the number of installments, the dates, any interest, and what happens if a payment is missed.

How many installments should a payment plan have?

Work backwards from what the customer can actually pay each period, not from a round number. Set the installment at a level their cash flow supports, then let the arithmetic give you the count. For business invoice plans, three to twelve monthly installments is the normal range. Past twelve months a plan starts to behave like a loan, which raises licensing and documentation questions.

How do I divide a total into weekly installments?

For an interest free plan, divide the amount owing by the number of weeks. A 5,200 dollar balance over 26 weekly payments is 200 dollars a week. If interest applies, divide the annual rate by 52 to get the weekly rate before applying the amortization formula. Weekly plans collect faster and default earlier, which is useful: you find out sooner.

How does a layaway plan work?

Layaway splits the price into installments paid before the goods are handed over, so the seller holds the item and carries no credit risk. The arithmetic is a zero interest plan: price minus deposit, divided by the number of installments. Set the calculator to 0 percent, enter the deposit as the down payment, and the schedule shows each payment and the date it is due.

Should I offer my customer a payment plan?

Offer one when the customer has paid reliably before and is facing a temporary cash problem, when the invoice is large relative to their normal spend, and when the alternative is collections. Decline when the account has already broken a plan, when the invoice is in dispute, or when there is no clear revenue source funding the installments. A down payment is the fastest test of intent.

How do I calculate the next date in a billing cycle?

Add the cycle length to the last billing date. Weekly cycles add 7 days, fortnightly 14, monthly one calendar month, quarterly three months. Monthly cycles dated on the 29th, 30th or 31st roll back to the last day of shorter months. The schedule in the calculator above applies the same rule, so the dates match what your accounting system will generate.

What is a payment schedule?

A payment schedule is the row by row list of every installment in a plan: the number, the due date, the amount, how much of it clears principal, how much covers interest, and the balance left afterwards. It is the document both sides agree to. Without one, a plan is a verbal understanding, and verbal understandings are what collections disputes are made of.

Should a B2B payment plan charge interest?

For plans of six months or less, zero percent is normal and the goodwill is usually worth more than the interest. Beyond six months you are financing the customer with your own working capital, so a modest rate of 4 to 8 percent to cover your cost of capital is reasonable. Charging much more than that turns a recovery plan into a lending product.

What happens if a customer misses an installment?

Decide this before the plan starts and write it into the agreement. The common structure is a short grace period of about five days, then a late fee and a formal notice, then acceleration of the whole remaining balance after two missed payments. Plans fail quietly when nobody is watching the schedule, so a missed payment needs to trigger something automatically.

How do I calculate installments in Excel?

Use PMT. For 10,000 dollars at 8 percent over 24 monthly payments, enter =PMT(0.08/12, 24, -10000), which returns 452.27. Use NPER to solve the other way: =NPER(0.08/12, -500, 10000) returns the number of payments if you can pay 500 a month. For a zero interest plan, skip PMT and divide the financed amount by the number of installments.

How do you calculate loan installments per month?

Divide the annual rate by 12 to get the monthly rate, then apply Payment = P x r(1+r)^n / ((1+r)^n - 1). For a 10,000 dollar loan at 8 percent over 24 months, r is 0.006667 and n is 24, so the payment is 452.27 a month. With no interest it is simply P divided by n, or 416.67 a month over 24 months. The calculator above also handles weekly, fortnightly and quarterly schedules.

What would the monthly payment be on a 10,000 dollar loan?

It depends entirely on the rate and the term. At 0 percent over 12 months it is 833.33 a month. At 5 percent over 24 months it is 438.71. At 8 percent over 36 months it is 313.36. At 10 percent over 60 months it is 212.47, and that last one costs 12,748 in total, so the low monthly payment carries 2,748 of interest. A longer term is a smaller payment and a larger bill.

How much is 26.99 percent APR on 5,000 dollars?

At a 26.99 percent annual rate on a 5,000 dollar balance: 480.06 a month clears it in 12 months with 760.72 of interest; 271.88 a month takes 24 months and 1,525.12 of interest; 204.10 a month takes 36 months and 2,347.60; 152.65 a month takes 60 months and 4,159.00, which is close to the balance itself. Paying above the minimum is what shortens this.

What does 12 percent interest work out to?

Twelve percent is normally an annual rate, so a monthly plan uses 1 percent per period. On a 10,000 dollar balance that is 888.49 a month over 12 months with 661.88 of interest, 470.73 over 24 months with 1,297.52, 332.14 over 36 months with 1,957.04, and 222.44 over 60 months with 3,346.40. Twelve percent sits at the top of good credit personal loans and the bottom of card rates.

Is 34.9 percent APR bad?

It is expensive, and it usually signals that the lender is treating the borrower as higher risk. For context, prime cards run roughly 15 to 22 percent, sub prime cards 25 to 36 percent, and good credit personal loans 6 to 12 percent. For a B2B customer payment plan, 34.9 percent is far outside the norm, which is 0 to 8 percent, and a rate that high is a sign the answer should be a larger down payment or no plan.

What is the difference between APR and the interest rate?

The interest rate is the cost of borrowing the principal. The APR is the interest rate plus fees such as origination or application charges, annualized. With no fees the two are the same. With 500 dollars of fees on a 10,000 dollar loan the APR is noticeably higher than the stated rate. Compare offers on APR, and if you want to model an APR here, enter the APR figure as the rate.

How do payment plans work in Xero or QuickBooks?

The balance is replaced by a schedule of smaller invoices, one per installment, each dated for its own due date and sent automatically. Reminders go out ahead of each date, a missed installment triggers a late fee and an escalation, and the receivable is settled and reconciled on the final payment. Running that by hand is where plans fail, which is what Paidnice payment plans automate inside both systems.

Related calculators

Net 30 CalculatorDue dates, late fees and early payment discounts.Early Payment Discount CalculatorThe real annual cost of 2/10 net 30.Statute of Limitations on DebtWhether a debt is still legally collectable, by US state.DSO CalculatorHow many days you wait to get paid, four ways.AR Turnover CalculatorCollection speed as a ratio rather than days.AR Aging AnalysisSee which balances are driving your DSO.Collection Efficiency (CEI)How much of what was collectable you actually collected.Bad Debt Expense CalculatorAllowance for doubtful accounts and the journal entry.Cash Conversion Cycle CalculatorCombine DSO, inventory days and payables days.

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