Net 45 Payment Terms: Managing Extended Payment Cycles with Enterprise Clients

Net 45 payment terms give customers 45 days from the invoice date to pay in full. This extended payment window is common in enterprise contracts, government work, and large B2B transactions where procurement processes take longer. While offering Net 45 terms can help you win bigger clients, it requires careful cash flow management and strategic accounts receivable practices.

When you see "Net 45" on an invoice, it means the full payment is due 45 days after the invoice date with no early payment discount. For example, an invoice dated January 1st with Net 45 terms means payment is due by February 15th. This payment term is essentially a 45-day interest-free loan to your customer—which makes it crucial to understand when to offer it and how to manage the cash flow impact.

What Net 45 Payment Terms Mean

Net 45 is a credit payment term that specifies the buyer has 45 calendar days from the invoice date to submit payment. The "Net" indicates the full amount is due without any deductions, while "45" refers to the number of days until the due date.

Unlike early payment discount terms such as "2/10 Net 45" (which offer a 2% discount if paid within 10 days), standard Net 45 terms don't include incentives for faster payment. The buyer pays the same amount whether they pay on day 1 or day 45.

When Businesses Use Net 45 Payment Terms

Net 45 terms aren't suitable for every transaction. They're most common in specific industries and business relationships where the extended payment window aligns with operational realities and established norms.

Enterprise and Corporate Clients

Large corporations often require Net 45 or longer payment terms because their procurement and accounts payable processes involve multiple approval layers. A Fortune 500 company might need 45 days to process vendor payments through their enterprise resource planning (ERP) system, complete internal reviews, and issue payments through scheduled batch runs.

If you're a vendor to major corporations, offering Net 45 terms is often non-negotiable. These clients typically won't work with vendors who demand faster payment, viewing extended terms as a standard industry practice. The tradeoff for the extended payment period is often higher contract values, recurring business, and the prestige of working with recognized brands.

Government Contracts and Public Sector Work

Government agencies at federal, state, and local levels commonly operate on Net 45 to Net 60 payment cycles. Public sector procurement involves additional compliance checks, budget verification, and bureaucratic processes that extend payment timelines beyond typical commercial transactions.

Contractors working on government projects should build these extended payment cycles into their cash flow planning from the start. Government work offers stability and reliable payment (governments rarely default), but the payment velocity is significantly slower than commercial clients.

Manufacturing and Wholesale Distribution

Manufacturers selling to distributors and retailers frequently use Net 45 terms because the buyer needs time to receive goods, stock inventory, and generate revenue from sales before paying the supplier. This is especially common in seasonal industries where retailers need extended credit to manage inventory purchases ahead of peak selling periods.

For example, a toy manufacturer might extend Net 45 terms to retail buyers purchasing inventory in August for the holiday season. The retailer receives goods in September, sells them in November and December, and pays the manufacturer in mid-October—timed with their own cash flow from early holiday sales.

Large Project-Based Work

Construction projects, enterprise software implementations, and other complex deliverables often involve Net 45 payment terms with milestone-based invoicing. When a single project might last 6-12 months, 45-day payment terms on each milestone invoice become a standard arrangement.

Net 45 vs Net 30 vs Net 60: Comparing Payment Terms

Understanding how Net 45 compares to shorter and longer payment terms helps you choose the right structure for different client relationships and negotiate more effectively.

The 15-Day Difference Between Net 30 and Net 45

While 15 additional days might seem minor, the difference between Net 30 and Net 45 terms has significant financial implications. That extra two weeks increases your days sales outstanding (DSO) by 50%, meaning you're extending 50% more credit to customers.

Consider a business with $100,000 in monthly revenue. With Net 30 terms, you have approximately $100,000 tied up in accounts receivable at any given time. Shifting to Net 45 terms increases that to $150,000—requiring an additional $50,000 in working capital to maintain operations while waiting for payments.

Managing Cash Flow with Net 45 Terms

Extended payment terms create cash flow challenges, particularly for growing businesses. When you deliver work today but don't receive payment for 45+ days, you need sufficient working capital to cover expenses during the gap between delivery and payment.

Calculate Your Working Capital Requirements

Before offering Net 45 terms, calculate how much cash you need on hand to sustain operations during the payment cycle. The formula is straightforward:

This calculation assumes perfect payment timing, where clients pay exactly on day 45. In reality, many clients pay late, so consider building a 15-30 day buffer into your working capital planning.

Stagger Your Invoicing Schedule

Instead of invoicing all clients at month-end, distribute invoices throughout the month so payments arrive on a rolling basis rather than in monthly lumps. This creates more predictable cash flow and reduces the feast-or-famine cycle common with extended payment terms.

For example, invoice clients with last names A-M on the 15th of each month and N-Z on the 30th. Or invoice based on project completion dates rather than calendar dates. The goal is steady payment arrivals throughout the month, making it easier to meet regular expenses.

Implement Deposit and Milestone Payment Structures

For large projects with Net 45 terms, protect cash flow by requiring deposits upfront and structuring milestone payments throughout the project timeline. A common structure is:

• 30% deposit before project start (Net 15 terms)
• 40% at midpoint milestone (Net 45 terms)
• 30% on completion (Net 45 terms)

This structure ensures you receive 30% of the project value quickly, providing working capital to fund the project, while still offering the client Net 45 terms on the bulk of the payment.

Use Invoice Financing for Growth Capital

When Net 45 terms tie up too much capital and limit growth, invoice financing can bridge the gap. Invoice financing lets you borrow against outstanding invoices, typically receiving 80-90% of the invoice value within 24-48 hours while waiting for the client to pay the full amount in 45 days.

The financing company charges fees (typically 1-5% of the invoice value), but this cost is often worthwhile if it enables you to take on more client work or prevents cash shortfalls. It's particularly useful for businesses experiencing rapid growth where new projects arrive faster than old invoices get paid.

Negotiating Net 45 Payment Terms with Clients

Net 45 terms shouldn't be your default offering—they should be a negotiated arrangement that makes sense for both parties. Here's how to approach these negotiations strategically.

When to Offer Net 45 Terms

Offer extended payment terms in these scenarios:

• Large contract values: If a single contract is worth $50,000+, the extra 15 days beyond Net 30 may be worth the additional revenue
• Long-term relationships: Established clients with proven payment history deserve more favorable terms than new customers
• Competitive advantage: When competing against larger vendors, flexible payment terms can help win contracts
• Industry norms: If Net 45 is standard in your industry, refusing to offer it might cost you business
• Lower risk profiles: Government agencies and Fortune 500 companies are low credit risks despite slow payment

When to Push Back on Net 45 Requests

Don't automatically accept Net 45 terms just because a client requests them. Push back when:

• Your business can't afford it: If extending 45-day credit creates cash flow problems, say no
• The client is a credit risk: New clients with unclear financials shouldn't receive extended credit
• Small transaction values: A $2,000 invoice doesn't warrant 45-day terms—stick to Net 15 or Net 30
• You have leverage: If you're providing specialized services with few alternatives, demand faster payment

Negotiating Better Terms Within Net 45

If you must accept Net 45 terms, negotiate additional provisions to protect your interests:

• Deposits: Require 25-50% upfront payment before beginning work
• Milestone payments: Break large projects into smaller invoices with separate 45-day cycles
• Early payment incentives: Offer 2-3% discounts if paid within 10-15 days
• Late payment penalties: Include late payment fees of 1.5-2% per month after day 45
• Price adjustments: Charge 5-10% more for Net 45 terms compared to Net 15 or upfront payment

Managing Accounts Receivable with 45-Day Cycles

Effective accounts receivable management becomes critical with Net 45 terms. The longer your payment cycle, the more organized your collection process must be.

Set Up Systematic Payment Reminders

Don't wait until day 45 to follow up on payment. Create a systematic reminder schedule:

• Day 0: Send invoice immediately upon project completion or delivery
• Day 30: Friendly reminder that payment is due in 15 days
• Day 40: Second reminder that payment is due in 5 days
• Day 45: Invoice due date—payment should arrive today
• Day 50: First overdue notice with late fee applied
• Day 60: Escalated collection notice
• Day 75+: Final notice before legal action or collections

Modern invoice software like QuickBillMaker automates this entire reminder sequence, sending professional payment reminders at scheduled intervals without manual effort. Automation ensures no invoice falls through the cracks and maintains consistent follow-up even when you're busy with client work.

Track Days Sales Outstanding (DSO)

Days Sales Outstanding measures how long it takes to collect payment after a sale. Calculate your average DSO monthly:

With Net 45 terms, your DSO should hover around 45 days. If it's consistently above 50-55 days, clients are paying late and you need to tighten collection procedures. If DSO is around 35-40 days, your collection processes are working well and some clients are paying early.

Create an Accounts Receivable Aging Report

Generate monthly aging reports that categorize outstanding invoices by how long they've been unpaid:

• Current: 0-45 days (within payment terms)
• 1-15 days late: 46-60 days (gentle follow-up)
• 16-30 days late: 61-75 days (escalated collection)
• 31+ days late: 76+ days (final notice, potential collections)

Aging reports help you identify problem accounts early and prioritize collection efforts on the oldest, highest-value overdue invoices.

Establish Clear Collection Policies

Document your collection procedures and follow them consistently. Your policy should specify:

• When and how you'll communicate about overdue payments
• Late fee amounts and when they're applied
• When you'll pause work for clients with overdue balances
• At what point you'll send accounts to collections or pursue legal action
• Whether you'll continue working with clients who consistently pay late

Strategies to Encourage Faster Payment Despite Net 45 Terms

Just because you offer Net 45 terms doesn't mean every client will wait the full 45 days. Implement strategies that motivate earlier payment while still offering the extended window when clients need it.

Early Payment Discounts

Offer 2-3% discounts for payment within 10-15 days. This is commonly written as "2/10 Net 45" meaning a 2% discount if paid within 10 days, otherwise the full amount is due in 45 days.

From the client's perspective, taking the 2% discount is like earning 18-24% annual return on their money (since they're saving 2% by paying just 10-35 days earlier). Financially savvy clients will almost always take early payment discounts, effectively converting your Net 45 terms to Net 10 for clients with available cash.

Multiple Payment Method Options

Make payment as frictionless as possible by accepting multiple payment methods. Include on every invoice:

• ACH/bank transfer: Low-cost for large B2B payments
• Credit card: Instant payment (though 2-3% processing fees apply)
• Payment portal links: One-click payment through your invoice software
• Wire transfer: For international clients or very large amounts
• Check: Still common in enterprise and government sectors

The easier you make it to pay, the faster clients will process payment. A prominent "Pay Now" button on digital invoices with one-click payment can reduce your actual collection time by 5-10 days compared to invoices requiring manual payment initiation.

Send Invoices Immediately Upon Completion

Don't wait until month-end to batch invoice if work completed on the 5th. Invoice immediately upon delivery to start the 45-day clock as soon as possible. Every day you delay invoicing is a day you delay payment.

For ongoing projects, invoice at logical milestones rather than waiting for complete project conclusion. If a project has clearly defined phases, invoice at each phase completion to maintain cash flow throughout the engagement.

Build Strong Client Relationships

Clients who value your work and relationship will often pay faster than the terms require. Regular communication, exceptional service quality, and going beyond contract requirements build goodwill that translates to better payment behavior.

When you're seen as a valued partner rather than just another vendor, clients will prioritize your invoices over others when processing their accounts payable batch runs.

Net 45 Terms for Different Business Models

Service Businesses and Agencies

Creative agencies, consulting firms, and professional service providers working with enterprise clients typically need to accept Net 45 terms. The key is structuring retainer agreements where monthly payments arrive on a rolling cycle.

For example, a marketing agency on a $10,000 monthly retainer invoices on the first of each month with Net 45 terms. By month three, the agency receives steady monthly payments even though each payment is 45 days behind the service delivery. This creates a predictable cash flow pattern once the initial 45-day gap is bridged.

Product-Based Businesses

Wholesalers and manufacturers extending Net 45 terms to retailers and distributors should implement clear inventory management and production planning processes. When you ship $50,000 in goods today but won't receive payment for 45+ days, you need working capital to fund the next production run.

Many product businesses use invoice factoring to convert long payment terms into immediate cash. You might receive 85% of invoice value within 48 hours, enabling you to fund new production while the factor collects the full payment from the customer in 45 days.

Freelancers and Solopreneurs

Individual consultants and freelancers should be very selective about offering Net 45 terms. When you're a one-person business, 45-day payment cycles create severe cash flow challenges since you can't distribute the impact across multiple concurrent projects the way larger companies can.

If you must accept Net 45 terms to work with a desirable enterprise client, negotiate a higher rate (10-15% above your standard pricing) to compensate for the extended payment cycle and cash flow impact. Alternatively, position Net 45 terms as a privilege for long-term retained clients rather than a standard offering.

Using Invoice Software to Manage Net 45 Terms

Manual tracking of 45-day payment cycles across multiple clients quickly becomes overwhelming. Professional invoice software transforms Net 45 terms management from a complex juggling act to an automated system.

Automated Payment Term Calculations

Set Net 45 as the default payment term for specific clients, and your invoice software automatically calculates due dates for every invoice. When you create an invoice dated March 1st, the system instantly sets the due date to April 15th without manual date math.

Scheduled Payment Reminder Automation

Configure automatic reminder emails at customizable intervals (30 days, 40 days, 45 days, and overdue reminders). The system sends professional, polite payment reminders automatically, ensuring consistent follow-up without you remembering to manually contact each client.

Real-Time Cash Flow Forecasting

Modern invoice software generates cash flow projections showing expected payment arrivals based on outstanding invoices and historical payment patterns. You can see at a glance that $15,000 is due this week, $30,000 next week, and $45,000 the following week—enabling better financial planning.

Accounts Receivable Aging Reports

Generate instant reports categorizing outstanding invoices by age, helping you identify collection priorities. See which clients consistently pay within Net 45 terms and which regularly pay late, informing decisions about future credit extensions.

Frequently Asked Questions About Net 45 Payment Terms

What does Net 45 mean on an invoice?

Net 45 means the full invoice amount is due 45 calendar days from the invoice date. The customer has 45 days to submit payment without any discount or penalty. For example, an invoice dated January 10th with Net 45 terms means payment is due by February 24th.

How do you calculate Net 45 payment terms?

To calculate Net 45 payment terms, add 45 calendar days to the invoice date. The invoice date is typically the date the invoice is issued or the date work was completed, depending on your invoicing practices. Count all days including weekends and holidays. Most invoice software calculates this automatically when you select Net 45 as your payment term.

Is Net 45 the same as 45 days?

Yes, Net 45 and "45 days" payment terms are functionally identical—both mean the full amount is due 45 calendar days from the invoice date. "Net 45" is the formal business terminology commonly used on invoices and contracts, while "45 days" is a more casual way of expressing the same timeframe.

What is the difference between Net 30 and Net 45?

Net 30 requires payment within 30 days while Net 45 gives customers 45 days to pay—a 15-day difference. This seemingly small extension has significant cash flow implications, effectively increasing your accounts receivable by 50%. Net 30 is the standard for most B2B transactions, while Net 45 is more common with enterprise clients, government contracts, and larger purchases where buyers need additional processing time.

Can I charge interest or late fees on Net 45 invoices?

Yes, you can charge late fees on payments received after day 45, but you must clearly state this policy on your invoice before the customer agrees to the work. Common late fee structures are 1.5-2% per month (18-24% annually) on the overdue balance. Ensure your late fee policy complies with state usury laws, which cap maximum interest rates for commercial transactions. Always include late fee terms in your service contract or invoice payment terms section.

Should small businesses offer Net 45 payment terms?

Small businesses should be cautious about offering Net 45 terms because they tie up significant working capital. Only extend Net 45 terms when: the contract value justifies it (typically $10,000+), the client is a proven low credit risk, you have sufficient cash reserves to manage 45+ day payment cycles, or Net 45 is standard practice in your industry and refusing it would cost you business. For smaller contracts or new clients, stick with Net 15 or Net 30 terms to maintain healthier cash flow.

What happens if a client doesn't pay within Net 45 terms?

If a client doesn't pay within 45 days, the invoice becomes overdue and you should immediately send an overdue payment notice. Your next steps depend on your payment terms and collection policy: apply late fees if specified in your contract, pause any ongoing work for that client until payment is received, escalate to phone call follow-up after 60 days past due, send a formal demand letter at 75-90 days past due, or engage a collection agency or pursue legal action for large amounts past 90 days. Document all collection attempts in case you need to pursue legal recovery.

Conclusion: Making Net 45 Terms Work for Your Business

Net 45 payment terms are a powerful tool for winning enterprise clients and large contracts, but they require strategic implementation and disciplined accounts receivable management. The 45-day payment window creates cash flow challenges that can strain or even break unprepared businesses, making it essential to understand when to offer these terms and how to manage them effectively.

Before agreeing to Net 45 terms, honestly assess whether your business has the working capital to sustain 45+ day payment cycles. Calculate your operating expenses, evaluate your current cash position, and project the impact of extended credit on your ability to meet payroll, pay vendors, and fund new projects. If the math doesn't work, have the confidence to push back and negotiate more favorable terms.

When you do offer Net 45 terms, implement systematic accounts receivable practices: automated payment reminders, regular aging reports, clear collection policies, and potentially invoice financing to bridge cash flow gaps. Use professional invoice software to automate tracking and follow-up, ensuring no invoice falls through the cracks during the extended payment cycle.

Remember that payment terms are negotiable. Don't accept Net 45 as a take-it-or-leave-it proposition—negotiate deposits, milestone payments, early payment discounts, or price adjustments that make extended terms work for both parties. The most successful businesses treat payment terms as a strategic tool rather than a rigid policy, adapting their approach based on client relationships, contract values, and their own financial position.

With careful planning, systematic processes, and the right tools, Net 45 payment terms can help you win bigger clients and larger contracts without sacrificing your financial stability.