Introduction to this document

Instalment agreement

There’s no argument that you’re owed money. However, the debtor can’t pay you in one lump sum so they offer to pay by instalments. You’re happy to accept their offer. Use our agreement to mark the spot and conclude matters.


Payment by instalment is a perfectly acceptable way of clearing a debt. In order to do this safely, always ensure that your agreement is in writing. That way, if things go pear shaped, you’ve at least got something that you can show the court as a record to demonstrate what was agreed.


In the agreement, always specify the amount of the instalments, when and how they’re to be paid and what happens if there’s a default, i.e. the balance owed is due immediately.


It’s entirely a matter of negotiation whether or not interest is added to the debt. Under the Late Payment of Commercial Debts (Interest) Act 1998 if the debtor is in business, provided that you fulfil the conditions under the Act, you’re entitled to charge interest on late payments.