Why B2B payment plans require accounting discipline
Offering instalment payment to a commercial customer can preserve a long-term relationship, save an important order, or support a project with staggered deliveries. In Switzerland, however, a B2B payment plan is not a simple informal agreement: it affects invoicing, VAT liability, revenue recognition, liquidity and, in case of default, debt collection actions.
Unlike consumer credit regulated by the Consumer Credit Act (CCA), business relationships enjoy greater contractual freedom. However, mandatory requirements under the Code of Obligations (CO), the VAT Ordinance (MWSTV) and Swiss accounting standards (Swiss GAAP/FER) remain. An SME that offers instalment payment without adequate documentation risks improperly deferring VAT, underestimating impaired receivables, or losing rights in enforcement proceedings.
This guide explains how to structure compliant B2B payment plans, calculate interest and default charges, account for instalments and defaults, and implement risk controls suitable for entrepreneurs and fiduciary firms using Accountex.
Legal framework: B2B, CO and practical limits
Before defining instalments, it is advisable to clarify the legal basis of the agreement and which clauses must be set out in writing:
B2B contractual freedom
Between two companies or two sole proprietors, the CCA does not apply. Amount, number of instalments, due dates, securities and interest are in principle freely negotiable, provided they do not violate mandatory provisions of the CO or antitrust rules in exceptional cases.
The agreement must be documented in writing — preferably as an addendum to the sales or service contract, with a repayment schedule attached. General terms and conditions (GTC) alone are insufficient unless explicitly referenced in the main contract.
Mandatory obligations under the CO
Art. 102 CO: unless otherwise agreed, the claim is due immediately. An instalment plan modifies this rule only if the parties validly agree to it. Art. 104 CO: in case of default, the statutory rate of default interest is 5% per annum, unless otherwise agreed.
Acceleration clause (contractual agreement): if the debtor misses two consecutive instalments or a significant portion of the plan, the creditor may, unless there is a tolerance clause, declare the entire remaining balance due and pursue full recovery. For withdrawal from the contract after breach, see art. 107 CO.
B2B instalment models compared
The choice of model affects invoicing, VAT and risk monitoring. Here are the three most common approaches among Swiss SMEs:
| Model | How it works | VAT | Default risk |
|---|---|---|---|
| Single invoice + internal plan | One invoice for the full amount; instalments recorded only in accounting or collection software | VAT due on issuance (except in special cases of periodic deliveries) | Medium: receivable already booked for the full amount |
| Partial invoices per instalment | Each due date generates an invoice (or debit note) with the instalment amount and due date | VAT allocated proportionally across each partial invoice | Low: exposure limited to the overdue instalment |
| Deposits + balance on completion | Deposit invoices during execution; final invoice with reconciliation | VAT on each deposit if the service is identifiable; caution with ongoing work | Low–medium: suitable for projects and B2B supplies |
| Interest-bearing financing | Increased price or explicit interest on deferred capital | Interest generally VAT-exempt if ancillary to commercial credit | Medium–high: requires more rigorous credit analysis |
For industrial projects or multi-month supplies, partial invoices or deposits are often preferable: they align revenue, VAT and customer exposure. A single invoice with an internal plan simplifies administration but concentrates risk and advances the VAT burden.
Invoicing and VAT treatment
Tax liability arises according to the accounting method adopted — generally upon issuance of the invoice, partial invoice or collection of the deposit (art. 40 MWSTG) — regardless of the payment plan agreed with the customer:
- •Single performance, deferred payment: if delivery or completion of the service occurs at a specific point in time, the full VAT is due on that date, even if instalments fall due in subsequent months. Accounting must separate trade receivables and VAT payable.
- •Periodic or partial performances: for maintenance, subscriptions, ongoing work or staggered deliveries, VAT accrues proportionally with each partial performance — consistent with invoicing per instalment.
- •Deposits before performance: a deposit collected before execution creates tax liability on the deposit for non-exempt services (art. 40 MWSTG, lit. c). Always document the nature of the deposit on the invoice.
- •Credit notes and instalment reversals: if a future instalment is cancelled or a discount is granted for partial non-performance, issue a compliant credit note; do not rely on internal accounting adjustments alone.
Mandatory elements on every instalment invoice
Clearly indicate: sequential number, date, identification of the parties, description of the service (or reference to the contract), net instalment amount, VAT rate, VAT amount, total, payment due date, reference to the plan where applicable (e.g. "Instalment 2 of 6") and IBAN. If interest is charged, it must be shown separately with the agreed calculation basis.
Interest, surcharges and default
In the Swiss B2B context, it is permissible to provide for interest on deferred capital in addition to the statutory default rate of 5% per annum (art. 104 CO). Practice varies by sector: industrial suppliers often apply explicit interest only after the due date; professional firms prefer to increase the price rather than invoice current interest.
Default interest accrues from the day after the due date, without the need for a formal notice of default, unless otherwise agreed. It is advisable to specify in the contract: annual rate (e.g. 5% statutory CO rate or market reference rate + margin), calculation basis (360 or 365 days), start date and invoicing method (monthly debit note or accumulation at final settlement).
Default interest calculation example
Overdue instalment: CHF 10'000. Agreed rate: 5% per annum. Delay: 45 days.
Interest = 10'000 × 0.05 × (45 ÷ 365) ≈ CHF 61.64. The amount should be invoiced via a separate debit note; VAT does not apply to default interest of an indemnification nature.
Contractual interest vs default interest
Contractual interest (price financing) forms part of the negotiated consideration if included in the total price. If invoiced separately as a standalone item on deferred capital, verify VAT treatment with your advisor: it generally remains exempt if strictly ancillary to commercial credit.
Avoid manifestly disproportionate rates or ambiguous clauses: the court may reduce excessive contractual penalties under art. 163 para. 3 CO.
Accounting under Swiss GAAP/FER
A well-managed instalment plan is reflected in accounting through consistent entries and traceability per customer:
| Transaction | Typical account (SME) | Note |
|---|---|---|
| Full invoice issuance | Debit 1100 Accounts receivable / Credit 3000 Revenue + 2200 VAT | Receivable for gross amount; instalment schedule in analytical account or ERP |
| Instalment collection | Debit 1020 Bank / Credit 1100 Accounts receivable | Match payment to invoice or specific instalment |
| Default interest | Debit 1100 Accounts receivable / Credit 8500 Financial income | Recognition at the time default interest is invoiced |
| Receivable impairment | Debit 6900 Impairment of receivables / Credit 1109 Allowance for doubtful accounts | When recovery appears uncertain despite reminders and failed payment plan |
| Bad debt write-off | Debit 1109 + 6900 / Credit 1100 Accounts receivable | On final write-off; document recovery attempts |
With Accountex, setting up due date schedules per invoice, automatic reminders and bank matching facilitates instalment monitoring. For Swiss GAAP/FER-compliant financial statements, assess at least once a year the adequacy of allowances on instalment receivables — especially if the customer shows signs of over-indebtedness or repeated delays.
Bad debt risk management
Instalment payment extends the exposure window. A structured B2B credit policy reduces losses and recovery costs:
Before granting the plan
- • Verify customer identity and registered office (commercial register extract, length of business activity)
- • Consult commercial information providers (Creditreform, Intrum, Bisnode) for material amounts
- • Set a maximum exposure limit per customer and require securities (deposit, bank guarantee, pledge) on large orders
- • Document internal approval: who authorises plans above threshold (e.g. CHF 5'000 or 30 days)
Monitoring and early warning
- • Weekly ageing report: highlight overdue instalments at 1–30, 31–60 and over 60 days
- • Suspend further deliveries or services until overdue instalments are settled
- • First formal reminder within 10 days of due date; notice of default with final deadline within 30 days
- • Consider accounting impairment if the customer initiates composition proceedings or appears in third-party enforcement records
Debt collection and enforcement proceedings
If the plan fails, the Swiss B2B creditor generally follows this sequence: written reminder, optionally notice of default with final deadline (art. 102 CO), then request for payment (RP) at the competent cantonal debt enforcement office (debtor's domicile). Formal notice of default is not legally required before the RP, but is recommended for evidential purposes; with a due date agreed on the invoice, default arises automatically under art. 102 para. 2 CO. The RP may include the remaining principal, default interest and documented recovery costs.
A signed instalment plan constitutes proof of the claim and due dates. Retain the contract, invoices, account statements, correspondence and proof of delivery of the notice of default. In case of dispute, the court verifies validity of the contract, default and amount owed.
For claims below cantonal thresholds, consider simplified proceedings or mediation before full debt enforcement (Betreibung). The cost of proceedings (cantonal fees, legal counsel if applicable) should be weighed against the remaining amount and the debtor's expected solvency.
Operational checklist for SMEs and fiduciaries
- Set out in writing the total amount, number of instalments, dates, IBAN and acceleration clause in case of default
- Choose an invoicing model consistent with VAT and revenue recognition
- Record the plan in the ERP due date schedule (Accountex) with automatic reminders
- Specify default interest rate and reminder procedure in the GTC or contract addendum
- Monitor receivables ageing and block new services if delay exceeds internal threshold
- Impair or write off receivables in a timely manner, with documentation for audit and tax purposes
- Periodically review the instalment policy: eligible customers, limits and required securities
A well-structured B2B payment plan balances commercial flexibility and financial control. With clear processes for invoicing, VAT, interest and recovery, the Swiss SME limits the impact of defaults on liquidity and maintains financial statements that meet the expectations of banks, investors and tax authorities.