Quarterly billing means that you must pay for a product or service four times within a year, every three months. Therefore, it is easy to distinguish this type of billing from monthly installments or one-off payments. Despite the fact that it is not as widespread a method of payment as monthly billing, quarterly installments have advantages and drawbacks.
Help with Unstable Cash Flow
If you own a business whose income is not a steady flow, quarterly billing can help you never miss a payment. Quarterly billing offers 12 weeks to accumulate payments for bills, so even if your business is not doing very well for a few days or weeks, you still have ample time to raise enough money.
Avoiding Vicious Circles
If a monthly payment is missed, you must cover January, for example, before moving on to the February payment, which deprives you of money you could use to pay for February, making you late for your that payment as well. In quarterly billing, you have ample time to cover a late payment and accumulate money for your next installment.
Lower Administrative Costs
For the organizations receiving the payments, four payments per year instead of 12 reduces administrative costs significantly. Recording transactions, depositing payments, sending transaction receipts, warning late payers and accumulating all outstanding payments before the following installment are tasks that cost an organization money, and quarterly billing can help companies reduce costs.
Difficulty in Managing the Budget
A reason monthly installments are a widespread billing method is because they can easily become part of a person's financial month. If you are given your salary monthly, it is far easier to set aside an amount for your bills. Emergency situations, such as medical bills, or a person's inability to manage personal finances can make saving money for a quarterly payment a more difficult task.
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