Payment Plan Percent vs. Fixed Percent

When you create steps in a payment schedule, you have two choices for a percentage calculation: Percent and Fixed Percent. This article describes the difference between each option to help you select the calculation method that works best for your organization.

Regardless of the percentage calculation you use, each payment plan step calculates based on the current order amount when the invoice is created. The main difference between a percent and a fixed percent calculation is that the percent calculation is taking previously created invoices/percentages into consideration when calculating the next payment plan step while the fixed percent always calculates the defined percentage from the current ordered total.

Percent

When using the Percent calculation, the invoice amount is calculated using the cumulative percentage (summarizing all percentages invoiced before and the current one) and the remaining current total of the order. See below for an example.

Assume you have a €10.000,00 order. The first payment plan step is invoiced at 25%. This results in a €2.500,00 invoice.

You add an additional €5.000,00 to the order before you invoice the second step. The second payment plan step is also invoiced at 25%.

Now the current order total is €15.000,00 and the cumulative percentage for the payment plan steps is 50%. This means that the invoice results in 50% of the current ordered total less the invoiced amount:

• (Cumulative) Percent Calculation: €15.000,00 * 50% = €7.500,00
• Less the invoiced amount of €2.500,00.
• Invoice total for the second invoice is €7.500,00 - €2.500,00 = €5.000,00.
  

Fixed Percent

When using a Fixed Percent calculation, the invoice amount is calculated using the percentage of the current payment plan step without taking into consideration any previously invoiced percentages/amounts. This means you could invoice greater than 100% with a fixed percent calculation.

Assume you have a €10.000,00 order. The first payment plan step is invoiced at 25%. This results in a  €2.500,00 invoice.

You add an additional €5.000,00 to the order before you invoice the second step. The second payment plan step is also invoiced at 25%. 

Now the current order total is €15.000,00. This means the invoice results in having 25% of the current ordered total invoiced.

• Fixed Percent Calculation: €15.000,00 * 25% = €3.750,00 is the invoice total for second invoice.