Payment agreement

The concept of a payment agreement is basically about a debtor/borrower paying one or more amounts to a creditor/lender based on an agreement.

Payment agreements are typically not a single payment, but a series of future payments. These can either be in the form of installments, debt reduction or simply a payment due at a later date.

Multiple interpretations of the word - but the same purpose

The word payment agreement has several meanings today - and with good reason, as it is used in different contexts. However, the purpose is the same: to establish an agreement for a series of payments.

Many Danes will typically associate the word payment agreement with a series of future payments that are registered with a payment service, where the payment is made automatically. In other words, an agreement on payments is established between the debtor/borrower and the payment service.

However, the word payment agreement is often used as a synonym or replacement for terms such as installment plan, debt settlement and the like.

For example, SKAT often uses the term payment agreement if a citizen or company has not paid an amount owed, and SKAT offers an installment plan where the amount is settled with a fixed amount over a shorter or longer period.

Here, it could be argued that the term installment plan would be more accurate. This emphasizes the point that the word payment agreement is often used differently - but the purpose is the same: an agreement on payments.

Why set up a payment agreement?

A customer, debtor or borrower will typically set up a payment agreement with a payment service or payment service for recurring payments where the customer wants to avoid manually paying an invoice every month.

By setting up a payment agreement with your bank, you ensure that the bank/payment service makes the payment on your behalf when requested by suppliers or similar.

A payment agreement with the bank also ensures that the invoice is always paid on time, avoiding reminder fees or other additional costs.

The payment service often charges a small fee for handling the payment itself.