Quarterly Billing: Advantages, Disadvantages & What You Need to Know

Paying quarterly can be an advantage if your income fluctuates.

Sending out monthly bills can be an expensive proposition for businesses and governments, requiring an investment of time, labor and postage or courier costs. That cost is magnified when bills go overdue, requiring additional mailings or phone calls for collection purposes. To keep those costs in check, billing is sometimes performed just four times each year, or once each quarter.

Pros and Cons

If you're accustomed to paying bills monthly, switching to quarterly payments can require an adjustment. That's especially true if the payment is inconveniently large. However, if you're disciplined enough to set aside one-third of the bill each month, it's no different than monthly billing. In fact, it can have positive advantages if your income is adequate but variable. For example, freelancers or commissioned salespeople might find that quarterly billing helps them avoid late fees they might otherwise incur in a low-income month. Some companies also pass along their administrative savings, offering reduced costs as an incentive to use quarterly billing.