What is a deferred payment?

Deferred Payment is a broad term that stands for one of the most common form of sales deals in the world. In simplest terms, deferred payment is a debt that is agreed to be paid in full at some later date. This form of payment is usually used when vendors believe that the payment received and the sale of product outweighs the risks of agreeing to a later payment from a buyer.
This unique payment form can be used in two different ways; vendors will either agree to pay in full at a later date, or pay in installments until the full amount has been paid for. With either form of payment that is chosen, vendors are expected to include interest in the payment. This is to help account for inflation, which is the natural rise of the value of money throughout time. One dollar today will be worth less in a year, and therefore interest takes this into account. Usually interest is a percentage of the total amount of debt, but the exact percentage is determined by the vendor.

In order to determine the payment amount and whether or not to move forward with a deferred payment, vendors will research the client and their financial history. Credit Reports and credit history detail the financial history of clients, and are a huge decision factor for vendors when it comes to deferred payment agreements. Vendors may also agree to deferred payment when buyers have a long-standing relationship with the vendor. The reasoning behind these decisions are that allowing buyers to receive a product without paying first is a huge risk for vendors; knowing buyers fully helps vendors understand how risky that decision truly is.

Deferred payment is one form of sales and marketing that will never leave. Businesses everydays are built around the intake and outtake of assets, and it is important for companies to take some amount of risk if they hope to grow their business plan.

Jonathan Boral

Jonathan Boral

Jonathan Boral, a junior at the University of North Carolina’s Kenan-Flagler Business School, grew up in Charlotte, North Carolina an avid fan of film, television, and music. He has spent many hours finding the delicate balance between his love for acting, business, and the entertainment industry. Through his school career, he has appeared in several different shows, including the musical Annie and Laughter on the 23rd Floor. Not only as an actor, but he has also been able to see the production side of shows as the Stage Manager for Oh Dad, Poor Dad, Momma’s Hung You in the Closet and I’m Feeling So Sad. Constantly finding new ways to study the business and production aspects of film and television, he has spent time researching box office returns and film production values, in hopes to one day writing for an entertainment journal, or working as a film producer or talent agent. He plans on further pursuing his knowledge of the business world by becoming an active member of the Marketing and Entrepreneurship Clubs at Kenan-Flagler Business School.

Currently at UNC, Jonathan has received numerous honors. Most highly is his position as the Vice President of the Omega chapter of Alpha Epsilon Pi, North America’s largest Jewish Fraternity. Along with this leadership position, he has been nominated for many achievements, including the National Society of Collegiate Scholars, the Leadership Advantage Program, the National Society of Leadership and Success, along with being on UNC’s Dean’s List for multiple semesters.

Now residing in Chapel Hill, he hopes to use his articles as an outlet for further business and financial knowledge, along with connecting to his readers with his youthful perspective. In his free time, he enjoys watching all types of films, playing with his dog Hutch (a chow mix), and spending time with family and friends.
Jonathan Boral

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