Offering installment payments to your customers: options and pitfalls

The three options side by side

Option 1: split your invoice into a deposit and installments

This is how contractors, trainers, event organizers and group travel businesses work: a deposit on signing, then installments on agreed dates. There is no lender and no credit check; you trust the customer, as you would with net-30 terms.

Example on a $4,600 quote plus tax: $230 GST and $458.85 QST, for $5,288.85 (calculation in our GST and QST guide).

The last installment absorbs the rounding so the total matches the invoice exactly.

Write this schedule into the quote the customer accepts, then on the invoice: at $500 or more, payment terms are part of the information Revenu Québec asks for on an invoice (Preparing Invoices).

The main pitfall: creating a credit contract without realizing it

As long as the customer pays the same price, in several parts, with no added fees, you are simply giving them time. Once paying in installments costs more than paying up front, credit charges come into the picture.

In its section on instalment sales, Québec's Office de la protection du consommateur (OPC, in French) lists as credit charges, among others: interest, administration fees, membership or renewal fees, commissions, and the value of the discount the consumer gets for paying cash. A "5% off if you pay in full" offer can therefore bring your plan under the credit rules.

For instalment sales, the OPC also states that the merchant must assess the consumer's capacity to repay before entering into the contract; otherwise it loses the right to credit charges and must refund any already paid (prior assessment, in French). If you want to add fees, interest or a cash discount, check with the OPC or a lawyer first.

Option 2: buy now, pay later

With this type of plan, the Financial Consumer Agency of Canada explains, the customer is financing the purchase with credit, and if they do not make their payments on time they will usually have to pay fees. They enter into one agreement with you for the purchase and another with the financial service provider for the financing.

For you, the advantage is being paid by the provider rather than the customer. Before signing, ask in writing for: the fees charged to the merchant on each sale, when the funds are paid out, how returns and refunds work, and who answers the customer if there is a dispute about a payment.

Option 3: the instalment sale

According to the OPC, an instalment sale contract is a contract of sale on credit: the merchant finances the goods, usually assigns the contract to a financial institution, and remains the owner of the goods (or the institution does) until the consumer has paid the full price and the credit charges.

It is mostly used for higher-value goods and comes with specific obligations: a written contract, a prior assessment of the capacity to repay, statements of account on request. For a service paid in a few installments with no charges, option 1 is almost always simpler.

Other common pitfalls

• Starting work without a deposit: make the first installment due on signing.
• Vague dates ("balance later"): every installment needs a written date and amount.
• Chasing payments by hand: without automatic reminders, a forgotten installment becomes a debt nobody wants to raise.
• Improvised failed-payment fees: for instalment sales, the OPC limits fees for an NSF cheque or a refused transfer to what the financial institution charged you.
• A final installment larger than the customer can send by bank transfer: at ZeniPay, bank transfers are capped at $2,500 per transaction; above that, the customer pays by card or you split differently.

Installment payments with ZeniPay

ZeniPay covers option 1. You choose 2 to 12 installments per invoice, by amount or percentage, with a date for each. Installments due today are emailed immediately; the others go out automatically on their due date, each with its own link for card or bank transfer payment.

A reminder is sent 3 days and again 7 days after an unpaid due date, a receipt goes out as soon as an installment is paid, and the invoice moves from partially paid to paid with the last one. You can resend or cancel an installment from the dashboard.

ZeniPay does not lend money, does not run credit checks and does not charge the customer interest: you grant the delay and the non-payment risk stays with you, which is why a deposit matters. Details on the Installment payments page.

Frequently asked questions

Official sources

• Office de la protection du consommateur — Instalment sale contracts (merchant section, in French)
• Office de la protection du consommateur — Assessing the consumer's capacity to repay (in French)
• Office de la protection du consommateur — Consumer payments and credit charges (in French)
• Financial Consumer Agency of Canada — Buy now, pay later plans
• Revenu Québec — Preparing Invoices (required information by amount)
• Revenu Québec — Calculating the Taxes (GST 5%, QST 9.975%, rounding)

This guide summarizes public rules; it does not replace the legislation or advice from an accountant or lawyer.

Related

• ZeniPay installment payments
• Québec invoicing: GST and QST
• Send a payment link
• Online invoicing

Split your next invoice into installments

Deposit today, balance on its dates, automatic reminders. Open your business account or ask us your questions.