Recovery of $45,000 for a small manufacturer in Columbus. AEP Ohio issued it as bill credits over 9 months. Client asked to pay my $18,000 fee in matching installments — $2,000/month for 9 months as the credits appear. I agreed but now I'm worried. What if he stops paying at month 4?
Client paying in installments — how to protect yourself
Installment agreements need two protections. First, an acceleration clause: if the client misses any payment by more than 15 days, the entire remaining balance becomes immediately due. Second, a late fee provision: 1.5% monthly interest on overdue amounts. Put both in a simple payment agreement addendum signed by the client. These provisions rarely get triggered but their existence motivates timely payment. Also consider asking for 50% upfront with the balance in installments — that gets you $9,000 immediately and reduces your exposure.
Got the client to agree to 40% upfront ($7,200) and the remaining $10,800 in 6 monthly installments with the acceleration clause. He paid every installment on time. The upfront payment plus the acceleration clause gave me enough security to sleep at night.