How Flexible Payments Can Increase Average Order Value
Flexible payments can allow a customer to order closer to what they actually need, rather than what they can comfortably pay for in one lump sum. This does not increase your quoted price. It can change how much of it a customer is willing to commit to.
The Short Answer
When a customer has to pay an invoice in full upfront, the size of the order is often set by what they can afford right now, not by what they actually need. Flexible payments, funded through PaidTerms Capital, can remove that immediate cash constraint by letting the customer spread the cost, while the supplier is still paid the full invoice amount upfront.
This can allow some customers to order closer to their real requirement. It will not apply to every customer or every order, and results depend on the product, the customer's circumstances and the size of the purchase.
What Average Order Value Means
Average order value is the average amount a customer spends per order, calculated across a set of transactions. For a supplier, it is one of the levers that affects revenue alongside the number of customers and how often they buy. Raising average order value without lowering price or increasing marketing spend generally means removing something that is limiting how much customers are willing to commit to in a single order.
Why Lump-Sum Invoices Can Restrict Order Size
A buyer weighing up an order is not only asking whether the product is worth the price. They are also asking whether they can afford to pay the full invoice right now, without disrupting cash they need for wages, stock or other suppliers.
When the answer is uncertain, the common response is to reduce the order: a smaller quantity, fewer optional items, or splitting the purchase into stages over several invoices instead of one. The underlying need has not changed. The order size has simply been shaped by what fits the buyer's cash position today.
How Flexible Payments Change the Purchasing Decision
With an instalment option through PaidTerms Capital, an eligible customer can spread the cost of the invoice over scheduled repayments instead of paying it all at once. The question shifts from "can we afford this all at once" to "can we manage this over the coming months", which is a different, and sometimes easier, decision for the buyer to make.
The quoted price does not change. The supplier is still paid the full invoice amount upfront. What changes is the shape of the buyer's cash outlay, which can make it easier to justify ordering the full quantity or specification they actually need.
Two Practical Examples
Example one: a packaging production run. A packaging buyer is deciding between a shorter production run sized to their immediate cash position, and a larger run that would bring the unit cost down and cover several months of stock. Paying the full amount upfront pushes them toward the smaller run. With an instalment option, the buyer can weigh the larger run against a repayment schedule instead of a single invoice, and may choose the more economical quantity they actually need.
Example two: an office fit-out. A business planning an office fit-out could complete the desks, chairs and storage in one project, or split the purchase into stages over separate budget cycles to manage the upfront cost. An instalment option lets the business weigh completing the fit-out in one order against a scheduled repayment, rather than delaying part of the project to a later invoice.
Both examples are illustrative. Whether a given customer orders more depends on their own circumstances, budget and approval process, not on the payment method alone.
When Instalments May Not Increase Order Value
Flexible payments will not increase order value in every case. Some customers order based on fixed budgets or approval limits that are unrelated to payment timing. Others may not be eligible for an instalment plan, or the order may already be sized to actual need rather than cash constraints. Larger orders must also remain commercially sensible: the aim is to help a customer reach the order they actually need, not to encourage spending beyond what is affordable or useful.
For an illustrative, assumption-based estimate, the average order value calculator can be a useful starting point, based on figures you provide rather than a guaranteed outcome.
How PaidTerms Capital Works
With PaidTerms Capital, the supplier issues the invoice as usual and an eligible customer can choose to pay it in instalments. PaidTerms pays the supplier the full invoice amount upfront once the customer is approved, and the customer repays PaidTerms directly over the agreed schedule. To understand the underlying mechanics, see what business instalment payments are, and for how this compares with a trade account, read trade accounts vs business instalments. See also when to introduce instalments in the sales process.
Frequently Asked Questions
Does offering instalments guarantee a higher average order value?
No. It gives eligible customers another way to pay for the order they actually need. Whether that changes order size depends on the customer, the product and their own budget or approval process.
Does this mean the supplier is paid less or later?
No. With PaidTerms Capital, the supplier is paid the full invoice amount upfront regardless of the customer's repayment schedule.
Explore PaidTerms Capital
See how PaidTerms Capital lets customers spread the cost of an order while suppliers are paid upfront.
Read next: when to introduce instalments in the sales process.
