For many businesses, receiving payments on time is crucial to maintaining smooth operations. Receiving on‑time payments keeps operations running smoothly. When you process dozens or hundreds of invoices each month, choosing the right terms makes all the difference. One common term in B2B transactions is Net 45, which gives customers 45 days to make payment after receiving an invoice.
Stop Missing Net 45 Deadlines Before It Hurts Cash Flow
See how HighRadius automates AP approvals and payment timing to help finance teams comply with vendor terms without delays or manual errors.
Request a DemoBut is Net 45 the right choice for your business? In this guide, we’ll explore what Net 45 means, how it works, the benefits and risks involved, and how to manage it effectively.
Net 45 is a common B2B payment term that means full payment is due within 45 calendar days of a designated starting point, usually the invoice date. In practice, it works like an interest-free, short-term loan from the seller to the buyer. This gives buyers time to verify goods or services and manage their internal payment schedules, while sellers must plan for a delayed inflow of cash.
The start of the 45 days can vary depending on how the contract or invoice is worded.
“Net 45” refers to 45 calendar days, including weekends and holidays, not business days. However, misunderstandings are common, especially in international or high-volume transactions.
To keep things crystal‑clear:
Net 45 terms can feel generous, but only if you state them clearly. Otherwise, even the best agreements risk late payments or confusion. How you word your invoice can make all the difference in keeping everyone on the same page and your cash flow on track.
While “Net 45” is a common phrase in invoicing, it’s still prone to misinterpretation. Instead of relying on shorthand, write out the full meaning in plain language. For example:
This ensures both the timeline and the reference point are unambiguous.
Don’t leave it up to the buyer to calculate 45 days from the invoice date. Instead, include a clearly labeled due date like:
Position this date prominently near the invoice header and again with the payment instructions to reinforce visibility and urgency.
Use design elements like bold fonts, shaded sections, or callout boxes to highlight the payment terms. When invoices are dense or itemized, these design touches ensure key dates stand out and speed up buyer action.
Want fewer payment delays and happier customers? Use these best practices to state your Net 45 terms clearly—so everyone knows exactly when and how to pay
Don’t just write “Net 45.” Instead, use plain language like “Payment is due within 45 calendar days from the invoice date.” This removes ambiguity and ensures the buyer understands both the timeline and the reference point used to calculate the due date.
Always state the actual due date (e.g., “Payment Due: August 30, 2025”) on the invoice. This removes the need for buyers to calculate 45 days from the invoice date, minimizing confusion and making it easier for their AP team to process the payment on time.
Highlight your payment terms using bold text, larger font size, or shaded background boxes. Place them by the header and next to payment instructions to ensure they’re seen first.
Be clear whether the 45-day clock starts from the invoice issue date or the receipt date. Defaulting to the invoice date is more common and transparent. Whichever you choose, explicitly state it to avoid disputes or assumptions from the buyer’s side.
Ensure that the same wording appears on your invoices, quotes, sales orders, and contracts. Inconsistencies between documents can confuse or reduce your ability to enforce the terms if a dispute arises down the line.
Use simple, professional language instead of dense legal or accounting terms. Many AP teams, especially in smaller companies, are not trained to interpret jargon. Clarity in your communication helps eliminate excuses for delayed payments.
Net 45 isn’t just jargon—it’s a powerful lever for your company’s finances. The terms you set affect cash flow, forecasting, and how clients see you. Here’s why Net 45 matters so much:
Payment terms determine how long your cash stays tied up in receivables. Net 45 allows buyers time to pay, but delays your ability to reinvest that money. Poorly managed terms can create cash flow gaps, even if the business is profitable on paper.
Knowing when payments will arrive allows businesses to plan spending, payroll, and growth investments. Net 45 creates predictability only when monitored properly; otherwise, it introduces risk that can skew short-term and long-term financial planning.
Offering Net 45 can build trust with enterprise clients and show flexibility. But it also sets a precedent. Clear, consistently enforced terms reduce friction and disputes, helping maintain a professional, mutually respectful relationship.
Enterprise clients often expect longer payment cycles. Offering Net 45 shows you can handle their scale. It can be the deciding factor in vendor selection for procurement teams that operate on longer internal processing cycles.
Clearly defined terms like Net 45 help standardize how your AR team tracks invoices and collections. It allows better use of automation tools and reduces errors, missed follow-ups, or confusion across sales, finance, and customer support.
Offering Net 45 isn’t merely a billing choice; it’s a strategic decision. It can deepen client trust and unlock large-deal opportunities, but it also stretches your cash flow. Let’s weigh both sides so you decide with confidence.
Beyond customer convenience, Net 45 can unlock growth and burnish your reputation as a flexible partner. Here’s how those benefits translate:
Enterprise customers often require extended payment terms to align with internal approval processes and procurement cycles. Offering Net 45 can position your business as a flexible, enterprise-ready vendor and help you win larger contracts.
Giving customers more time to pay signals trust and partnership. It can strengthen client relationships over time, increase retention, and make your business a preferred supplier, especially if buyers are managing tight cash cycles.
In competitive industries, Net 45 can set you apart from vendors with stricter terms. Flexibility in payments can tip the scales in your favor when buyers are choosing between multiple providers offering similar products or pricing.
Extended terms allow customers more time to inspect goods, complete internal verifications, and match invoices to purchase orders. This makes it easier for them to process larger or custom orders without disrupting their workflows.
Despite its advantages, Net 45 also delays incoming cash, something that can put financial pressure on your operations if not properly managed. Here are the key challenges you should prepare for:
What happens when cash sits in receivables for six weeks? You may struggle to cover payroll, pay suppliers, or fund operations—slowing growth if reserves run dry.
Long terms raise the odds of late payments if you’re not automating reminders and follow-ups. That pushes up DSO and clouds your revenue forecasts
More due dates to track and reminders to send translate to extra work—or higher automation spend. For high-volume AR teams, Net 45 can amplify operational costs.
The more time that passes after an invoice is sent, the harder it becomes to collect. If a customer goes out of business or stops responding, your business could be left writing off the full amount as bad debt.
Deciding whether to offer Net 45 payment terms can feel like a balancing act. On one hand, longer terms can win you larger clients and build trust. On the other hand, they can tie up your cash and introduce risk. Below is a two‑part guide to help you decide if Net 45 fits your business, and how to protect yourself if it does.
1. Evaluate your cash‑flow capacity
Take a hard look at your working capital and Days Sales Outstanding (DSO). If your DSO is already high—say, north of 45 days—adding Net 45 could leave you scrambling to cover payroll or supplier bills. Only extend terms you can support without dipping into emergency reserves.
2. Benchmark against industry norms
What do your peers and prospects expect? In some sectors, manufacturing, wholesale, or enterprise services, Net 45 (or even Net 60) is standard. If you can’t match those terms, you risk losing business. Still, don’t default to longer terms unless you’re confident your finances can handle the delay.
3. Segment customers by risk and relationship
Not every customer deserves the same terms. Consider offering Net 15 or “Pay In Advance” (PIA) to new or high‑risk clients. Reserve Net 45 for long‑standing, reliable partners who have proven they pay on time. Tailoring terms this way keeps you in control while rewarding loyalty.
Try “2/10 Net 45”: give a 2% discount if they pay within 10 days, otherwise Net 45 applies. This nudge accelerates your cash flow without taking away your flexibility.
Make penalties part of the deal up front—think 1–1.5% monthly on overdue balances. Be sure to consult local usury laws before setting any fees to stay fully compliant.
If extended terms strain your coffers, consider factoring or invoice financing. Factoring sells your invoices for immediate cash, while invoice financing lets you borrow against unpaid bills. Both provide breathing room without chasing customers.
Leverage AR automation tools, such as QuickBooks, Xero, or Bill.com—to send invoices, reminders, and follow‑ups automatically. Automation shrinks DSO, cuts errors, and ensures Net 45 doesn’t become a headache.
Net 45 can be a powerful tool for growth, if you choose it wisely and guard against its downsides. By assessing your cash‑flow capacity, aligning with industry norms, and segmenting customers, you make a confident decision. Then, by offering early‑pay incentives, enforcing penalties, tapping financing solutions, and automating processes, you protect your liquidity and keep your business humming. Offer Net 45 strategically—and watch it become a growth enabler, not a bottleneck.
No, Net 45 is not universally standard. Its usage depends heavily on the industry, contract type, and business size. While it's common in manufacturing and professional services, sectors like retail or food & beverage usually require shorter terms like Net 7 or COD. Always benchmark your industry norms before setting Net 45 as your default.
Yes, offering Net 45 can delay incoming payments and tie up working capital. If not planned for, this can lead to cash shortages, missed supplier payments, or even payroll issues. It’s essential to assess your liquidity and Days Sales Outstanding (DSO) to ensure your business can afford to extend such credit without risking financial instability.
Yes, it’s legal—but only if those fees are clearly stated in your original contract or invoice terms. In addition, the fee amount must comply with state or local usury laws, which often cap monthly interest rates. Always consult legal or financial advisors before enforcing penalties to ensure full compliance and enforceability.
No, small businesses should avoid applying Net 45 across the board. Instead, evaluate each client’s reliability and financial standing. For new or high-risk customers, shorter terms like Net 15 or advance payment are safer. Reserve Net 45 for established clients with strong payment histories and stable operations to reduce cash flow risk.
Yes, automation is a powerful tool for managing Net 45 terms. AR software can schedule reminders, flag overdue invoices, apply late fees, and generate reports to track DSO. These systems reduce manual follow-up and help businesses manage extended terms more confidently, improving cash flow visibility and minimizing human error.
Positioned highest for Ability to Execute and furthest for Completeness of Vision for the third year in a row. Gartner says, “Leaders execute well against their current vision and are well positioned for tomorrow”
Explore why HighRadius has been a Digital World Class Vendor for order-to-cash automation software – two years in a row.
HighRadius stands out as an IDC MarketScape Leader for AR Automation Software, serving both large and midsized businesses. The IDC report highlights HighRadius’ integration of machine learning across its AR products, enhancing payment matching, credit management, and cash forecasting capabilities.
Forrester acknowledges HighRadius’ significant contribution to the industry, particularly for large enterprises in North America and EMEA, reinforcing its position as the sole vendor that comprehensively meets the complex needs of this segment.
Customers globally
Implementations
Transactions annually
Patents/ Pending
Continents
Explore our products through self-guided interactive demos
Visit the Demo CenterPlease fill in the details below
Please fill in the details below
We have seen financial services costs decline by $2.5M while the volume, quality, and productivity increase.
Colleen Zdrojewski
Trusted By 1100+ Global Businesses
