Waterfall Payment Scheme – Definition

Cite this article as:"Waterfall Payment Scheme – Definition," in The Business Professor, updated May 12, 2019, last accessed October 27, 2020, https://thebusinessprofessor.com/lesson/waterfall-payment-scheme-definition/.


Waterfall Payment Scheme Definition

A waterfall payment is a payment scheme in which higher-interest loans or higher-tiered creditors receive payment before lower-interest loans or subordinate lenders receive payment. A waterfall payment is a payment (repayment) scheme under complex payment arrangements, it is used for multiple loan arrangement with varying degree of hierarchy and priority.

In waterfall payments, multiple loans are split into tranches and higher loans receive interest and principal before lower ones receive any payment of interest. All tiers of loan tranches receive payment in the payment circle but this is done based on hierarchy. For instance, higher-tiered creditors are paid back in full before the lower ones receive principal payments.

References for Waterfall Payment Scheme

Academic Research on Waterfall Payment Scheme

Global marketing management, Lee, K., & Carter, S. (2011). Strategic Direction, 27(1).

Waterfall and sprinkler new-product strategies in competitive global markets, Kalish, S., Mahajan, V., & Muller, E. (1995). international Journal of research in Marketing, 12(2), 105-119.

International Market-Entry Decision Models: How Important Are They?, Okonkwo, P. A. (1991). American Journal of Business, 6(2), 62-68.

Capturing the cross-national learning effect: An analysis of an industrial technology diffusion, Ganesh, J., & Kumar, V. (1996). Journal of the Academy of Marketing Science, 24(4), 328-337.

Converging trends within the European Union: Insights from an analysis of diffusion patterns, Ganesh, J. (1998). Journal of International Marketing, 32-48.

Learning effect in multinational diffusion of consumer durables: An exploratory investigation, Ganesh, J., Kumar, V., & Subramaniam, V. (1997). Journal of the Academy of Marketing Science, 25(3), 214-228.

Understanding and managing international growth of new products, Stremersch, S., & Tellis, G. J. (2004). International Journal of Research in Marketing, 21(4), 421-438.

Project marketing in multi-project organizations: A comparison of IS/IT and engineering firms, Blomquist, T., & Wilson, T. L. (2007). Industrial Marketing Management, 36(2), 206-218.

What makes for CRM system success—Or failure?, Foss, B., Stone, M., & Ekinci, Y. (2008). Journal of Database Marketing & Customer Strategy Management, 15(2), 68-78.

Internationalization strategies of emerging markets firms, Tsai, H. T., & Eisingerich, A. B. (2010). California Management Review, 53(1), 114-135.

The international takeoff of new products: The role of economics, culture, and country innovativeness, Tellis, G. J., Stremersch, S., & Yin, E. (2003). Marketing Science, 22(2), 188-208.

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