Changing Payment terms of Invoices

Some questions: what are the reasons for changing the payment terms? How long have the existing payment terms been in place? What customer impacts do the new terms have? Do you plan to allow a couple of months notice for everyone to update their systems? Whatever the answers are to these questions, clearly state the "Whys" to the customer and ensure you are being sensitive to the impacts and try to limit them. Make the transition as smooth for the customer as possible.

As Christie states we need a little context on why this is being considered. Personally, I would always use your system or you will have issues. How do you properly age invoices with changed dates? How can you manage collections if the dates are different from the system? Without any context, just don't change dates.

There is a legal implication in changing payment terms on invoices that already have been issued. Whether the invoice is under an umbrella sales contract or a single separate invoice......it is a contract and you may not be able to change or alter unilaterally.

It is a different story if it is brought about by encoding error (and you are just correcting) the invoice and the umbrella sales contract states differently.

I should have been more articulate about the reasons for it. Answering Christie's questions. The customer was on a 30 day term initially & havent paid up for this long & now the customer has cited financial reasons for non-payment asking for extension in terms. The request for updating the terms has almost been immediate & there has been no coding issues.

I would discourage changing/altering the original due date.
It takes the invoice/account out of your past due accounts. In case you take legal actions, you will need to show the history of the account and that it was already past due (original due date) and extension.

I agree with Emerson no need to change the dates. If they are asking for an extension or terms in my experience working with the client is normally the best option. If you can get them to commit to paying $X amount per month until the debt is paid with interest you will be best to collect something vs nothing. You could also partner with a collections agency who specializes in collecting debt.

Agree with how others have suggested the existing items are dealt with. However, you should be well within your rights to revoke credit terms on any new sales. For business reasons you may wish/need to continue to sell to them in order to induce those partial payments on old balances; clearly those new sales should be paid in full prior to shipping/providing additional services.

Each respondent has provided sound advice. The correct business question should not be whether to change an invoice due date. Instead, the key issues are how to collect what is owed by a financially distressed customer and whether to continue selling to that customer and, if so, under what terms. In many such cases, the sales team will have a vocal opinion linked to the fear of losing a "good" customer (which might be defined as any customer that buys a lot, whether or not it has the means to pay within agreed terms).