Payment agreement template

Use this free payment agreement template to ensure that payments are made and received on time.

Our templates are for general information only. You should not rely on them, and Juro is not liable for any reliance on them. The templates might contain errors, including unlawful provisions and might create risks and liabilities if used. The templates are not legal advice, nor a substitute for it. By accessing any template, you accept these terms and agree that any use is at your own risk. Some of these templates were created using generative AI with human-assisted prompts.

Our templates are for general information only. You should not rely on them, and Juro is not liable for any reliance on them. The templates might contain errors, including unlawful provisions and might create risks and liabilities if used. The templates are not legal advice, nor a substitute for it. By accessing any template, you accept these terms and agree that any use is at your own risk.

In the world of business, ensuring that payments are made and received on time is crucial for maintaining cash flow and building trust between parties.

This is where a payment agreement comes into play. Similar to how non-disclosure agreements protect confidential information, payment agreements safeguard the interests of parties in a financial transaction.

Let's delve into the details of payment agreements and how you can create one.

What is a payment agreement?

A payment agreement, also known as a payment plan agreement or Installment Agreement, is a legal contract that outlines the terms of payment between two parties. It details the payment structure, timelines, amounts, and conditions under which payments must be made.

This type of contract is typically used when one party owes money to another and both parties wish to formalize the repayment arrangement.

This type of contract is commonly used in scenarios where large sums are involved, allowing for payments to be broken down into more manageable instalments. That said, there are different types of payment contracts to consider.

Types of payment agreements

Payment agreements can be simple or complex, depending on the transaction's nature. They might be:

• Standard payment plan: A straightforward agreement detailing the amount due and the due date.
• Instalment plan: Specifies a series of payments over time, often including interest or finance charges.
• Deferred payment plan: Allows for a delay in payment until a specified date, sometimes used in educational or large purchase contexts.

When are payment agreement used?

A payment agreement contract is commonly used in situations like personal loans, instalment purchases, or when settling a debt. It provides a clear framework for repayment, helping to prevent disputes and ensuring that both parties understand their obligations.

Here are common scenarios where a payment agreement is beneficial:

• Selling high-value items: When selling goods like vehicles or machinery, a payment agreement can structure the payment in instalments.
• Providing services:Freelancers or companies offering services may use payment agreements to ensure they are paid upon completion of work.
• Loan repayment: Personal or business loans often use payment agreements to set clear expectations for repayment.
• Medical expenses: Healthcare providers may offer payment agreements to patients for covering treatment costs over time.

Who creates payment agreements?

Typically, the creditor or service provider drafts the payment agreement. However, in some cases, both parties may collaborate to develop terms that are mutually agreeable.

For more complex payment agreements, or commercial payment agreements, it's common for in-house legal counsel, or external counsel to review and approve the contract terms.

However, smaller businesses managing simple payment agreements may bypass this step and finance departments, or individual entrepreneurs might be responsible for creating these agreements.

What should a payment agreement template include?

A well-crafted payment agreement template should cover the following elements in sufficient detail:

• ‍Parties involved: The contract clearly identifies the parties involved, usually referred to as the "lender" or "creditor" (the party to whom money is owed) and the "borrower" or "debtor" (the party who owes the money).‍
• Payment terms: This section outlines the amount of money owed, the payment schedule, and the method of payment (e.g., bank transfer, check, etc.). It may also include details like the due dates for payments, the amount of each installment, and the total amount to be paid over time.
• ‍Interest rate: If applicable, the contract will specify whether interest will be charged on the amount owed, including the interest rate and how it will be calculated.‍
• Consequences of non-payment: The contract will outline what happens if the borrower fails to make payments on time. This could include late fees, additional interest, or legal action.‍
• Termination clause: This section may describe the conditions under which the contract can be terminated, such as full repayment or breach of the agreement.‍
• Signatures: Both parties must sign the contract to indicate their agreement to the terms. The signatures make the contract legally enforceable.‍
• Governing law: The contract may specify which jurisdiction's laws will govern the agreement, which is especially important if the parties are in different states or countries.

How to create a payment agreement

Creating a payment agreement template can be straightforward, but it's crucial that you ensure all of the details we just listed are both accurate and enforceable. Here's what a typical process can look like, and an insight into how a contract management system like Juro can improve it at each stage.

1. Drafting the agreement

• Start with a robust contract template: Begin with a payment agreement template to ensure you cover all necessary elements, such as the parties involved, contract payment terms, interest rates (if applicable), and consequences for non-payment. Templates provide a structured format, which you can customize to fit your specific needs.
• Populate the template with key details: Clearly define the amount owed, the payment schedule, the payment method (e.g., bank transfer, check), and any additional terms such as interest rates or late fees. Include any relevant dates, such as when payments are due and the total duration of the payment plan.
• Specify each party's responsibilities: Clearly state the responsibilities of both parties. For example, the lender's responsibility might include providing receipts for payments received, while the borrower's responsibility is to ensure timely payments.

Unfortunately, the manual drafting process is often slow and inconsistent, with a high risk of missing critical details that later lead to headaches.

Here's a quick overview of how Juro solves this problem for other businesses drafting payment term agreements at scale:

• Automated contract templates: Juro provides automated contract templates that allow you to quickly draft payment agreements by quickly filling in key details such as party names, payment amounts, and schedules. This reduces the time spent on document creation and ensures consistency across all agreements.
• AI-powered drafting capabilities: You can use Juro’s legal AI assistant to automatically generate clauses or entire sections of the agreement, reducing manual effort and minimizing the risk of errors. Juro can also suggest standard clauses based on best practices, ensuring all essential elements are included.

2. Review the agreement

• Conduct a thorough legal review: Before finalizing the agreement, both parties need to review the contract terms carefully. Involving legal counsel at this stage is highly recommended, especially for complex agreements, to ensure that all terms are fair, clear, and legally enforceable.
• Clarify any ambiguities: Address any unclear terms or potential areas of dispute. Make sure that the language used in the agreement is straightforward and unambiguous to avoid misunderstandings and costly contractual disputes later down the line.
• Add details about jurisdiction: Include a section specifying which jurisdiction’s laws will govern the agreement, particularly if the parties are located in different states or countries.

Managing amendments and resolving disputes can be complex and time-consuming, with different versions flying around and confusion over what’s final, especially when these versions are static (often PDFs) and don't have a clear audit trail.

Fortunately, Juro's intelligent contract automation platform can also streamline the contract review process, too:

• Collaborative, browser-based workspace: Juro’s browser-native platform allows both parties to review the agreement in real-time, directly within the document. Comments and suggestions can be made instantly, enabling a seamless review process without the need for back-and-forth emails.
• Version control: Juro keeps track of all changes made during the review process, allowing both parties to see a clear history of edits and revisions over time. This ensures that everyone is on the same page and that all modifications are documented.
• Approval workflows: Juro’s automated workflows help streamline the approval process. Once terms are agreed upon, the document can be routed to the appropriate stakeholders for final approval, ensuring smooth and efficient negotiation.

4. Signing the agreement

• Add signatures to the contract: Once both parties are satisfied with the terms, the agreement should be signed by all parties involved. These can be wet ink signatures or electronic signatures. This stage formalizes the agreement and makes it legally binding.
• Distribute copies of the contract: Provide each party with a signed copy of the agreement. Ensure that all copies are identical and reflect the final terms, rather than earlier versions of the agreement.

The main friction at this stage is the fact that the signing process can be delayed by the need for physical signatures or the inconvenience of switching between platforms (like Docusign or Adobe Sign) for eSignatures, which slows down the entire process.

Juro solves for this pain by bringing native eSigning into the same platform you're creating, negotiating, and later storing your payment agreements in. Here's how:

• Native eSignatures: Juro’s native eSignature functionality allows both parties to sign the payment agreement electronically, making the execution process quick and hassle-free. This eliminates the need for printing, scanning, or physically mailing documents. Instead, they can sign on mobile, or any other device.
• Signatures with validity: Juro’s eSignatures are legally binding and compliant with global eSignature laws, providing peace of mind that the agreement is enforceable once signed.

5. Managing the agreement post-signature

• Monitor contract performance: Both parties must adhere to the terms set forth in the agreement. The borrower should make payments as scheduled, and the lender should provide any necessary documentation, such as receipts.
• Track key contract deadlines: Regularly monitor the payment schedule and contract deadlines to ensure compliance with the terms agreed. If any issues arise, such as a missed payment, address them promptly according to the terms outlined in the agreement.

Manually tracking payments and keeping physical or fragmented digital records can lead to missed deadlines, lost documents, and disputes over payment status - all of which prove costly for your business.

Juro's data-rich contract repository and automated reminders can reduce these risks and improve visibility into contracts, no matter how high your contract volumes are. These features are particularly useful:

• Automated contract reminders: Juro can automatically send reminders to both parties about upcoming payments or important contract milestones, ensuring that the payment schedule is adhered to without manual follow-up.
• Centralized repository for all agreements: Store all signed agreements in Juro’s secure, searchable repository. This makes it easy to access and review payment agreements at any time, track payment status, and maintain a comprehensive record of all transactions.
• Integrations with invoicing systems: Juro integrates seamlessly with payment and invoicing systems like Xero, Quickbooks, Stripe, and more. This enables you to set up automated invoicing and generate invoices in demand, based on a contract's status in Juro.

Automate payment agreements with Juro

If managing payment agreements is becoming a bottleneck for your business, consider exploring contract automation solutions like Juro. An all-in-one platform can help you create, manage, and track payment agreements efficiently, freeing up time for more strategic tasks.

Only Juro offers a flexible, integrated and truly end-to-end contract platform for all teams to use - not just legal. That's why businesses like Trustpilot, Deliveroo, Remote, Angellist, and Quantumscape use Juro to manage their contracts.

Interested in joining them? Book a personalized demo today.