How Business Instalment Payments Work in New Zealand

The Traditional Payment Problem for NZ Businesses

Most New Zealand trade accounts still work the same way: a supplier delivers goods or services, issues an invoice, and waits for a single due date. A common version of this is "20th of the month following", where an invoice issued on 1 August falls due on 20 September, close to 50 days later.

That structure gives the buyer time to pay, but it gives the supplier very little certainty. Payment either arrives in full on the due date, arrives late, or does not arrive at all, and the supplier carries that risk for the whole period.

A Worked Example

Example: a Waikato-based supplier issues a $12,000 invoice to a business customer for a bulk order. Instead of asking for the full amount upfront or offering standard 30-day terms, the supplier offers a 6-month instalment plan through PaidTerms.

1. Invoice issued The supplier raises the $12,000 invoice in Xero as usual and sends the customer a PaidTerms instalment option alongside it.
2. Buyer selects a plan The customer chooses the 6-month option, which works out to instalments of $2,000 each before any applicable fee, and reviews the full schedule before confirming.
3. Application and approval The customer completes a short online application. Approval is typically quick, though not every applicant will be approved.
4. Payments proceed on schedule The customer pays each instalment on the agreed date. Depending on the plan the supplier chose, the supplier is either paid as each instalment lands, or was already paid the full $12,000 upfront when the plan was approved.

This example uses a round figure to illustrate the structure. Actual fees, approval outcomes and available terms depend on the invoice and the customer's application, and are confirmed before anyone commits to a schedule.

What Happens for the Supplier

Suppliers using PaidTerms choose between two settlement models, and the choice changes what happens after the invoice is sent.

• PaidTerms Pro: the supplier is paid as the customer makes each instalment, without needing the invoice funded upfront.
• PaidTerms Capital: PaidTerms pays the supplier the full invoice amount upfront and takes on responsibility for collecting the customer's repayments.

Either way, the supplier is not left manually tracking a payment plan or chasing a customer who has fallen behind. That work sits with PaidTerms, not the business that made the sale.

What Happens for the Buyer

For the buyer, the process is closer to applying for a payment plan than opening a trade account. They see the invoice amount, the number of instalments, the repayment dates and any fee before agreeing to anything.

Once approved, the buyer makes each repayment on the agreed date, in the same way they would manage any other scheduled business expense. Missed or late repayments are followed up by PaidTerms rather than by the supplier.

How Instalments Differ From a Normal Trade Account

A standard NZ trade account is an informal credit arrangement: the supplier extends time to pay and hopes the customer settles the invoice by the due date. There is usually no structured schedule, no visibility for the supplier over when funds will actually arrive, and no third party managing the risk.

Instalment payments are more structured. The schedule, the number of payments and (with PaidTerms Capital) the supplier's upfront settlement are all agreed before the sale proceeds, rather than left to be chased up after the invoice falls due.

Eligibility, Fees and Repayment Responsibilities

Not every invoice or customer will be eligible. PaidTerms assesses applications individually, and only approved customers are offered an instalment plan.

• Applications are usually assessed quickly, though approval is not automatic or guaranteed
• PaidTerms charges a fee for instalment payments, disclosed upfront before the customer confirms a plan
• The buyer is responsible for making each scheduled repayment on time
• Suppliers should confirm with their accountant how any fee or funding arrangement applies to their own accounts

When Instalments May or May Not Be Appropriate

Instalments tend to work well for larger invoices, repeat business customers, and situations where a buyer would otherwise reduce their order to fit what they can pay immediately. For more on this, see what business instalment payments are and where they generally fit.

They are less likely to add value for very small, routine invoices where paying upfront or on standard terms is already simple for both sides.

Frequently Asked Questions