Imagine landing a huge client for your small business. They love your product and want to order more—but they need 45 days to pay. Should you wait? The short answer: It depends.

Net 45 is a common payment term that gives customers 45 days to pay after they get their invoice. It’s a way for businesses to work together with clients when getting paid right away isn’t an option.

Here’s a net 45 breakdown. Learn everything from calculation methods to how to keep your cash flow running smoothly.

What Are Net 45 Payment Terms?

Invoicing isn’t always as simple as it seems on the surface. Every small business owner has to answer an important question: How long should you give customers to pay? The key is striking a balance between getting paid and giving trusted customers enough breathing room to feel comfortable.

So, what does net 45 mean on an invoice, exactly? It’s not complicated. The customer gets 45 days to pay after you send the invoice. 

When you use net 45 terms, you offer what’s called a trade credit. Trade credit means providing goods or services to customers now and letting them pay later. It’s a little bit like a short-term loan, but there are no interest rates involved.

The 45-day payment period starts when you send the invoice, not when your customer receives the goods. This includes weekends and holidays. For example, if you send out an invoice on March 1st, the net amount would be due by April 15th.

Some small businesses offer early payment discounts to encourage faster invoice payment. On the flip side, you can also have penalties. If customers don’t pay within the agreed net 45 terms, you can charge late fees to protect your cash flow.

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How To Calculate Net 45

Calculating net 45 payment terms is straightforward once you know the rules. First, look at your invoice date. That’s when the clock starts ticking. Then, count forward 45 days to get the payment due date.

Let’s say you send an invoice on June 1st. Counting 45 days forward, the net amount is due by July 16th. It’s that simple.

When it comes to calculating the net amount due, add in any extra charges like shipping to arrive at the final tally. And don’t forget to factor in any early payment discounts you’re offering. For example, you might apply a 2% discount if customers make the invoice payment within 10 days instead of taking the full 45. You write this on the invoice as “2/10 net 45.”

Use a good invoice template, a net 45 calculator, or quality invoicing software to make sure you don’t leave out any of this critical information.

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Net 45 Examples

Let’s take a look at some common ways small businesses use net 45 payment terms. While the basic idea is always the same, choosing the right combination of terms and discounts will help you and your customers find an invoice both sides are comfortable with.

Here are some of the net 45 payment terms you might encounter:

Standard Net 45 Terms

This is the most basic type that all other invoices that use net 45 build on. With these terms, the customer pays the full invoice amount within 45 days. There’s no discount for early payment, but also no confusion about the net amount due.

2/10 Net 45 Terms

With these payment terms, the customer gets a 2% discount for paying the invoice within 10 days. For example, for a $1,000 invoice, the customer gets a $20 discount for paying early.

1/15 Net 45 + 2% Late Penalty

This invoice comes with an early payment discount of 1%, but with a longer payment period of 15 days. It’s a tradeoff because it gives customers a little more time to get the discount, but with smaller savings. 

This time, there’s also a 2% penalty if the customer takes more than 45 days to pay the invoice. On a $1,000 invoice, early payment would save $10, and late payment would add $20 to the net amount due.

Each of these payment terms balances the need to get paid with giving customers flexibility. The right choice depends on your business needs and your customers’ payment habits.

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Net 30 Versus Net 45

When considering different payment terms, another option you’ll probably want to look at is net 30. While these payment terms work the same way, those extra 15 days can make a big difference—positive or not so positive—for both you and your customers.

The main difference is simple. Net 30 terms give customers 30 days to pay the invoice, while net 45 terms extend it to 45 days. Net 30 terms are more common, especially for small businesses. They help sellers get paid sooner and reduce the risk of late payments. But net 45 terms give buyers more time and space to manage their cash flow.

Before settling on payment terms, ask yourself some key questions about your business. First, can your cash flow handle the wait? Make sure your choice aligns with your own business cycle and that you can still cover bills, pay suppliers, and any other expenses when you have to wait an extra 15 days.

Next, what’s normal in your industry? Some expect net 30 terms, while others regularly use net 45. Look at what competitors offer and what customers typically expect. Using net 45 terms might give you an edge, or it might just be the cost of doing business in your market.

Don’t forget to consider your customers’ needs and preferences. Smaller businesses might struggle to keep track of longer payment periods, and individuals might prefer net 30 terms for easier cash flow calculations. Consider offering different terms to different customers based on their size, stability, and payment history.

For new customers, you might want to start with net 30 terms until they prove they can pay invoices reliably. Then you could offer net 45 terms as a reward for good payment history. This approach helps you protect your business while building stronger customer relationships.

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Tips for Adding Net 45 Payment Terms to Your Invoices

If you’ve decided to offer net 45 payment terms, follow these simple tips to make sure the money keeps flowing without a hitch:

1. Be Crystal Clear

Setting up net 45 payment terms for your invoices is one thing. Making sure they work out smoothly is another. 

It starts by being crystal clear about your terms. Write them in plain language on your invoice, and spell out exactly what “45 days” means. For example: “Payment is due within 45 calendar days from the invoice date.”

You can also highlight the most important items, like late payment penalties and the final payment due date. This way, customers know exactly what their obligations are at a glance.

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2. Send Invoices Right Away

Get those invoices out promptly. Delays only push back the time you’ll get paid, potentially throwing off your cash flow management.

3. Set Up Payment Reminders

Don’t just send out an invoice and hope for the best. Set up friendly payment reminders to keep things on track. 

You might send one a few days before the early payment discount deadline and another when the final due date is getting close. Using invoicing software to handle everything automatically saves time and cuts down on busy work.

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Invoice Simple’s Online Payment Processing Software Makes It Easy

Providing easy payment methods is convenient for your customers and helps make sure you get paid on time. Invoice Simple makes it happen.

With Invoice Simple’s software, you can give customers flexible online payment options in seconds. Send digital invoices via email, SMS, or by manually sharing a link. You can also make it easy for your clients to pay you instantly from a paper invoice by turning on the Invoice Simple Payments QR Code. Your clients can scan the QR Code with their phones and pay online.