Installment vs Recurring Quick Guide from ReliaBills

Installment vs. Recurring Invoices

We often think of them as synonymous and interchangeable. But the fact is that Installment Invoices and Recurring Invoices are actually very different, and this article will prove just that.

If you do a quick surf on the internet, for example from Intercom, you’ll see that the search results will bring back different definitions for both installment invoices and recurring invoices. Incorporating both changes your entire business landscape, making it more diverse and versatile. Whether you’re accepting a subscription or membership, your users will appreciate the payment options that you offer them.


The nature of your business does not necessarily define which invoice method you use (although some businesses and merchants are more likely to opt for one way over another). Many companies may actually choose both. The method chosen is the one that best fits the particular situation as well as the product or service being invoiced.


First, it is important to understand that both Recurring and Installment invoices involve an extended financial relationship between merchant and customer. There is typically a written and mutually agreed-upon disclosure of terms. Invoices are sent over a period of time, and the customer makes payments. It sounds like they are very similar. But not when we look at the detail.

Total Balance

An installment payment plan will always involve a mutually-agreed-upon total balance due. Most people think of purchasing a car and then making regular payments. But it can also apply to other business transactions such as a landscape project or website creation. When a large sum is broken down into smaller invoices and spread over time, this type of payment is called an installment plan. Installments are necessary as it gives customers the option to make payments in segments instead of a hefty one-time fee.

The total dollar amount due may include finance fees or charges for the convenience of spreading the payment into segments that are paid over time. Whereas a recurring invoices payment method have no sense of a larger payment due. Invoices are documents sent on a regularly scheduled basis for services rendered.

Number of Invoices

An installment payment plan will always have a predefined, and mutually agreed upon, number of payment terms. The sum of these installment payments will equal the Total Payment. Recurring payments may also have a predefined number of payment terms (e.g., lawn care for six months). But most often, they are open-ended categories.

End Date

An installment payment plan will always identify an end date. This date indicates that the due date on which the payment needs to be settled. In contrast, recurring invoices may carry on as long as the service is active and continual. Your utility bills, for example, will continue until you move or vacate.

Invoice Amount

Each installment payment invoice is typically for the same, mutually agreed-upon sum of money. However, the first invoice may be larger if it includes a deposit or upfront payment. Or it can be smaller if it is for a partial month or pro-rated plan. The final invoice may also have a difference in the additional fees and other payment processes.

Recurring Invoices are wide open since they only reflect on the services rendered and each item’s corresponding payment total. Your phone bill, for example, may vary from month-to-month based on usage. And your monthly lawn care invoice may vary if depending on the additional service that your customer’s that you acquire.

Invoice Creation

You will need to generate recurring invoices one at a time for every service that you complete. In comparison, installment payments are pre-generated all at once. That way, the customer can see the remaining number of payments due, which will make a lot of difference.

Auto Payments

Ideally, both invoice methods benefit significantly if automated payments are enabled. However, due to the variability of invoice amounts, recurring payments benefit more from variable auto-billing. This means that the business has the authority to automatically charge customers for an amount that may vary from period to period.

Over Payments

Whether it’s card payments, bank account transfers, or online payments, getting paid for your service is important. When a recurring invoice encounters an overpayment, the amount will automatically convert into credit on the customer’s bank account. The reason is that you’ve yet to generate the next invoice. Once generated, the overpayment is automatically applied. In turn, the total amount will reflect the deduction from the invoice before you it is sent to the customers. For installment payment plans, an overpayment is an amount that will reflect in the LAST or FINAL invoice instead. 

Wrapping Up

Each of these payment plans will be relevant in different types of transactions. While they are not technically error-free, they do provide value to both merchants and customers. Most companies do not limit themselves to one method or the other. Instead, they use both depending on the circumstances and the product/service rendered.

ReliaBills technology supports the similarity and difference between both installment payments and Recurring invoices, billing, and payments.

For more information about this amazing software, watch this video below:

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