Payment Terms Cash Impact Calculator
Compare how Net 15, 30, 60, and 90 payment terms affect your cash position. Model late payments and see the true cost of extended terms.
Business Financials
Compare 3 Payment Term Scenarios
Best Scenario
Net 15
Saves $7,500/year in opportunity costs vs worst scenario
Side-by-Side Comparison
| Metric | Net 15 | Net 30 | Net 60 |
|---|---|---|---|
| Term Days | 15 days | 30 days | 60 days |
| Effective Days to Cash | 19 days | 34 days | 64 days |
| AR Balance | $62,500 | $112,500 | $212,500 |
| Annual Opportunity Cost | $3,125 | $5,625 | $10,625 |
| Cash Runway (months) | Infinite | Infinite | Infinite |
6-Month Cash Position Projection
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Month 6
Payment terms directly impact your cash conversion cycle. Use our DSO calculator to track days sales outstanding and our cash flow forecast calculator for detailed projections. Read our guides on invoice payment terms and accounts receivable best practices.
How Payment Terms Impact Cash Flow
Enter Financials
Input revenue, expenses, cash position, and current payment behavior.
Compare Scenarios
Select three payment term scenarios to compare side by side.
Optimize Terms
See AR balances, opportunity costs, and cash projections to pick the best terms.
Key Formulas
Effective Days to Cash:
Effective Days = Term Days x (1 - Late %) + (Term Days + Late Days) x Late %Accounts Receivable Balance:
AR = (Monthly Revenue / 30) x Effective DaysAnnual Opportunity Cost:
Opportunity Cost = AR Balance x 5% annual rateWho This Calculator Is For
B2B Service Businesses
Model the cash flow impact of different payment terms when negotiating with clients.
Finance Teams
Quantify the cost of extended terms and late payments to build the case for stricter policies.
Small Business Owners
Understand how payment timing affects your ability to cover expenses and maintain runway.
Frequently Asked Questions
What are the most common payment terms?
Net 30 is the most common B2B payment term. Net 15 is increasingly popular for smaller businesses and startups. Net 60 and Net 90 are common in enterprise and government contracts. Learn more about choosing the right terms in our invoice payment terms guide.
How do late payments affect cash flow?
Late payments increase your effective days-to-cash and inflate accounts receivable balances. If 25% of customers pay 15 days late on Net 30 terms, your effective collection period extends to nearly 34 days. This ties up more cash and increases the opportunity cost of delayed payment.
Should I offer early payment discounts?
Early payment discounts like "2/10 Net 30" (2% discount if paid within 10 days) can improve cash flow but reduce revenue. Compare the discount cost against your cost of capital. If your cost of capital exceeds 2%, the discount may be worth it.
What is the opportunity cost of delayed payment?
Opportunity cost is the return you could earn on cash that is tied up in accounts receivable. This calculator uses a 5% annual rate. With $100K monthly revenue on Net 60 terms, your AR balance is roughly $200K, costing you $10,000 per year in foregone returns.
How can I get customers to pay faster?
Strategies include: (1) Offer early payment discounts, (2) Send invoices immediately upon delivery, (3) Set up automated payment reminders, (4) Accept credit card and ACH payments, (5) Add late payment penalties to contracts. Read our accounts receivable best practices guide for more.
Automate Cash Flow Tracking
Track accounts receivable, payment patterns, and cash flow impact automatically with real-time dashboards.