Payment schedule template

What is a payment schedule?

A payment schedule is a plan outlining when payments are due and the amount that needs to be paid per payment period. 

For example, you might share a payment schedule template with a contractor, investor, or creditor to arrive at a timeline together. 

You can use the payment schedule to create a budget for upcoming payments, check in on outstanding balances, and see who you still owe money to.

When used effectively, payment schedules help businesses manage their cash flow to avoid any disruptions. It’s simpler to allocate the money needed for smaller transaction amounts over a longer period of time than to make a single payment in full.

Types of payment schedule templates

Payment schedules are commonly used in various contexts, including loans, mortgages, contracts, and construction projects. Some common types of payment schedule include:

• Loan payment schedule template: In the case of a loan or mortgage, a loan payment schedule template typically breaks down the repayment into equal or varying installments over a specified period. It specifies the principal amount, interest rate, and repayment frequency (monthly, quarterly, etc.). Payment details in a loan payment schedule help borrowers understand their obligations and budget accordingly.
• Milestone payment schedule template: For projects with checkpoints of completion, a milestone payment schedule template helps you build out a payment timeline that matches payments with milestones.
• Bill payment schedule template: This template is mostly used to organize monthly bills (mostly utilities) a company incur every month, including water, phone, garbage collection, electricity, and more.
• Invoice payment schedule template: For businesses managing multiple outstanding invoices at once, an invoice payment schedule template helps them schedule and budget for all upcoming payments across vendors.
• Project payment schedule template: In freelance or contract agreements for services or goods, a project payment schedule may indicate the milestones or deliverables that trigger payments. It ensures that payments are made as the work progresses or specific conditions are met.
• Construction payment schedule template: In construction projects, a payment schedule outlines the agreed-upon amounts and dates for progress payments. These payments are usually linked to completion stages or specific project milestones, allowing contractors and subcontractors to manage their cash flow and expenses.

Why is the payment schedule template important?

Businesses can benefit from using a payment template for several reasons:

• Consistency: A payment schedule template ensures that all payment schedules within the organization are clear, easy to understand, and follow a consistent structure.
• Time-saving: By using a pre-designed payment schedule template, businesses can save time and effort as they only need to input the specific details of each payment, such as amounts to be paid by payment period and due dates.
• Accuracy: A payment schedule template helps minimize errors in payment calculations or due dates.
• Communication: Payment schedules often involve multiple parties, such as clients, customers, suppliers, or contractors. The template can be shared electronically or printed, ensuring that all stakeholders have a clear understanding of the payment obligations, payment method, and deadlines.

Pros and cons of payment schedules

There are many reasons to opt for a payment schedule, but that doesn’t make it a one-size-fits-all solution. Before deciding to use a payment plan, consider the benefits and drawbacks.

The biggest reason for choosing payment schedules is to better manage cash flow. As opposed to making one big payment, paying in smaller segments means less of an impact to your cash flow.

There’s also the predictability of payment schedules. Having to budget for a massive one-time payment requires planning far in advance whereas a payment schedule will fit more naturally into your budgets.

However, you may want to rethink using payment schedules if you don’t have the administrative oversight to manage payments. Missed payments risk souring your vendor relations or resulting in fees or interest.

Note that payment schedules will vary by vendor. You may be required to pay a fee or interest to spread out the payments which will impact your bottom line.

Ultimately, whether you should opt for a payment schedule depends on who you’re working with, what their terms are, and whether you’re confident you can manage the cost of extra administrative work.

How is the payment schedule calculated?

The payment schedule calculation starts with mapping out all outstanding payments.

From there, use the following steps:

1. Define the payment schedule terms: Payment terms include all the relevant information like how frequently payments will be made, for how much, and whether there will be interest that accrues on the outstanding balance.
2. Calculate the payment amounts: Divide the outstanding balance with any interest or processing costs by the amount of payments that will be made.
3. Compile all outstanding payments: List out all monthly payments and sum them up to get your total scheduled payments in a month.
4. Review and finalize: Look over the breakdown of transactions for anything that seems odd or incorrect. You should treat payment schedules as a “measure twice and cut once” kind of practice given your budgeting and financial planning hinges on it.

Payment schedule FAQ

What information is included in a payment schedule?

A good payment schedule should include the following information:

• Vendors
• Descriptions of good or service
• Total outstanding amount
• Any fees or interest on outstanding amount
• Scheduled payments by month
• Remaining balance

What is a payment schedule in construction?

It’s common in construction for companies to agree on a timeline of work completion with contractors. A payment schedule is then established so part of the payment is released at each checkpoint of project completion.

For example, a construction company might hire a mason to make rock walls for a project. If they were to agree on $20,000 for the project, the company could negotiate for $5,000 to be released at four different checkpoints of completion: 

1. When the design is submitted
2. When the materials are ordered
3. When the framework is set up
4. When the wall is completed

What are the typical contractor payment schedule types?

Typical contractor payment schedules will vary by the contractor type and the work they provide. 

Longer-term projects of high dollar amounts will typically have more scheduled payments that match up with checkpoints of project completion.

But shorter-term projects of small dollar amounts will have shorter payment schedules of smaller amounts.

When negotiating a payment schedule with a contractor, it’s best to work together to find a middle ground that feels fair where you’re not paying too much upfront, but the contractor isn’t left waiting for the project to be complete to get their full compensation.

Can a payment schedule be altered?

A payment schedule can be altered, but only with the agreement of all parties involved.

Typically a payment schedule will be paired with a formal agreement or contract that must be signed before work can be begin. These documents are legally binding.

But a contract can be amended if both parties consent to adjusting the terms. 

In the case of a payment schedule being altered, it should be formalized with the same level of documentation as the original payment schedule. If you’re feeling uncertain about the process, it’s best to consult with a professional.

How does a payment schedule work with interest?

When a payment schedule has interest, the payment is divided up into a portion that pays down the balance owed and a portion that covers the interest costs.

This should be clearly documented in an amortization schedule.

Any loans you have will come with an amortization schedule as part of the documentation. For payment schedules between you and a contractor, you can use an amortization calculator to draft up a schedule.

What happens if a payment is missed on a payment schedule?

If you miss a payment date, you may face late fees, interest charges, and a ceasing of work. Contractors may pause their output until the business is up-to-date on payments.

The consequences of late payments are typically outlined in any agreement documents or contracts that are drafted as part of the payment schedule process.