A Commercial Payment Plan Agreement is a legally binding contract between a creditor (the party owed money) and a debtor (the party owing money) that restructures an outstanding commercial debt into a series of scheduled instalments. In Australia, commercial payment plans are used when a business owes money to another business — for example, from unpaid trade invoices, a business loan, or a damages claim — and the parties agree that the debtor will repay the debt over time rather than in a lump sum.

A Commercial Payment Plan Agreement typically includes the debtor's formal acknowledgement of the outstanding debt, the instalment schedule (amount, frequency, and dates), interest provisions, default events and consequences (including acceleration of the full balance), enforcement rights, and — where the debtor is a company — a personal guarantee from the directors or owners.

Commercial payment plans in Australia are not subject to the National Credit Code (NCC) under the National Consumer Credit Protection Act 2009 (Cth), which applies only to consumer credit arrangements entered into for personal, domestic, or household purposes. This gives the parties greater freedom to negotiate the terms, including interest rates and default remedies, without the NCC's consumer protection requirements.

However, the Australian Consumer Law (ACL) still applies to the extent that unconscionable conduct in commercial transactions is prohibited under section 21 of the ACL. A creditor who uses their superior bargaining position to impose grossly unfair terms on a debtor may be exposed to ACL unconscionability claims.

This template is designed for B2B commercial debt restructuring in all Australian states and territories and includes all the elements needed for a legally sound and commercially effective payment plan agreement.

A Commercial Payment Plan Agreement is appropriate in the following circumstances.

Unpaid trade invoices: A supplier has delivered goods or services to a business customer but has not been paid. Rather than commencing debt recovery proceedings immediately, the supplier agrees to accept structured repayments over a period of time. A formal payment plan documents this arrangement and protects the supplier's rights if the debtor defaults.

Business loan restructuring: A lender has advanced funds to a business borrower and the borrower is struggling to repay. A payment plan documents the restructured repayment terms and preserves the lender's right to enforce the full balance on default.

Commercial damages: One business owes damages to another following a breach of contract. Rather than litigating the amount and enforcement of those damages, the parties agree to a structured payment plan.

Post-judgment debt collection: After obtaining a court judgment for a commercial debt, a creditor may prefer to accept structured repayments rather than pursue writ enforcement (which can be costly and uncertain) — particularly where the debtor has some capacity to pay over time.

Business-to-business credit: Any B2B scenario where the parties want to document the terms of deferred payment for a commercial obligation, including renovation costs, consulting fees, and distribution arrangements.

A formal Commercial Payment Plan Agreement is preferable to an informal email exchange because it: acknowledges the debt in writing; sets a fixed schedule with default consequences; preserves the creditor's right to interest and enforcement costs; allows for a personal guarantee from company directors; and creates an evidentiary record if litigation is ultimately required.

A comprehensive Australian Commercial Payment Plan Agreement should include the following key elements.

Debt acknowledgement: The debtor's written acknowledgement that the debt exists, that it is due and payable, and that the amount is correct as at the date of the agreement. This acknowledgement prevents the debtor from later disputing the existence or amount of the debt, and may also restart the limitation period for debt recovery under the relevant Limitation Act in the debtor's state.

Instalment schedule: The agreement should set out the amount of each instalment, the frequency (weekly, fortnightly, monthly, or quarterly), the due date of the first instalment, the number of instalments, and the date of the final instalment by which the entire debt must be repaid. The instalment amounts should be achievable for the debtor while ensuring the creditor is repaid within a commercially acceptable timeframe.

Interest provisions: In a commercial context, it is common and lawful to charge interest on the outstanding balance during the payment plan period. The interest rate, calculation method (daily or monthly), and compounding frequency should be clearly stated. Some agreements include an incentive clause waiving interest if the debtor makes all payments on time.

Default and acceleration: The agreement should define what constitutes a default — including missed payments, insolvency events, and misrepresentation — and specify the consequences, including acceleration of the full remaining balance, withdrawal of any interest concessions, and the creditor's right to enforce the debt by legal proceedings.

Personal guarantee: Where the debtor is a company, the creditor should consider requiring a personal guarantee from the company's director(s) or owner(s). This provides the creditor with a direct claim against the individual if the company defaults and cannot pay.

Governing law and enforcement costs: The agreement should specify the governing state, confirm that enforcement costs (including solicitor's fees) are payable by the defaulting debtor, and confirm that the National Credit Code does not apply.