How to Change Terms in QuickBooks Online

Setting the right payment terms for your customers is a critical part of managing your cash flow, and updating those terms shouldn't slow you down. Whether you need to change your company-wide default, adjust terms for a specific loyal customer, or make a one-off modification to a single invoice, QuickBooks Online makes the process straightforward. This guide will walk you through exactly how to change payment terms in every common scenario, ensuring your invoices always reflect the correct due dates and expectations.

Why Your Invoice Payment Terms Matter

Before we jump into the "how," let's quickly cover the "why." Payment terms are the conditions under which a sale is made, primarily specifying the period allowed for a buyer to pay for goods or services. Common examples include "Due on receipt," "Net 15," or "Net 30," where the number indicates the days the client has to pay after the invoice date.

Correctly setting these terms in QuickBooks Online does three important things:

• Manages Cash Flow: Your payment terms directly influence when you receive a payment. Precise terms help you forecast incoming revenue and manage your business's financial health more effectively.
• Sets Clear Expectations: Clearly stated terms on every invoice prevent confusion and disputes. Your customers know exactly when their payment is due, which reduces late payments and follow-up activities.
• Automates Key Functions: QuickBooks uses the terms you set to automatically calculate the "Due Date" on each invoice. It also uses this date to accurately populate your Accounts Receivable (A/R) Aging reports and trigger automated payment reminders, saving you administrative time.

How to Change Your Company-Wide Default Payment Terms

Your default payment terms are the standard terms that QuickBooks Online will automatically apply to any new customer you add to your system. Setting a default saves you from having to manually select terms every time you create a new invoice for a new client. If most of your clients are on Net 30, for example, making that your default makes sense.

Here’s how to set or adjust your company’s standard invoice terms:

1. Navigate to the Gear icon (⚙️) located in the top right corner of your dashboard.
2. Under the "Your Company" column, select Account and settings.
3. On the left-hand menu, click on the Sales tab.
4. You'll see several sections. Click anywhere in the Sales form content section to expand its options.
5. Find the line item for Preferred invoice terms and click the pencil icon (✎) on the right side to edit.
6. Use the dropdown menu to choose your new default term. You'll see standard options like Net 15, Net 30, Net 60, and Due on receipt.
7. If the term you need isn't on the list (e.g., Net 45), you can select + Add new from the top of the dropdown list. This will allow you to create a custom term, which we cover in more detail later.
8. Once you've selected your preference, click the green Save button for that section.
9. Finally, click Done at the bottom right of the screen.

Important Note: Changing this setting does not affect the payment terms for your existing customers. It will only apply to new customers you create moving forward.

How to Update Payment Terms for a Specific Customer

You might have specific agreements with certain clients. Perhaps you offer more flexible terms to a long-term partner or have tighter terms for a new customer with no payment history. QuickBooks allows you to set unique default terms for each customer, overriding the company-wide default.

Follow these steps to customize terms for an individual customer profile:

1. From the left navigation bar, go to Sales and then select the Customers tab.
2. Scroll through your customer list or use the search bar to find the specific customer profile you want to edit. Click on their name.
3. On the customer's detail page, click the Edit button located in the top right corner.
4. A side panel labeled "Customer information" will appear. Click on the Payment and billing tab within this panel.
5. Look for the Preferred payment terms dropdown menu. The current default for that customer will be displayed.
6. Click the dropdown and select the new payment terms you want to apply specifically to this customer for all future invoices.
7. Once you've made your selection, click the Save button at the bottom of the panel.

From this point on, any new invoice created for this customer will automatically use these updated terms instead of the company-wide default. This change will not alter any of their existing, previously created invoices.

How to Change Terms on a Single Invoice

Sometimes you only need to change the terms for a single transaction. This could be for a specific project, a special promotion, or a one-time agreement with a client. You can easily override the default terms (both company-wide and customer-specific) directly on the invoice form without changing any underlying settings.

For a New Invoice:

1. Start by creating a new invoice. Click the + New button in the top left and select Invoice.
2. Select your customer from the dropdown. You’ll notice the Terms field automatically populates with that customer's preferred terms (or the company default).
3. To change it for just this invoice, simply click on the Terms dropdown field.
4. Select the appropriate terms from the list for this specific transaction. As soon as you make a selection, watch the Due date field—it will instantly adjust based on the new term you picked.
5. Complete the rest of the invoice by adding your products or services.
6. Click Save and send to email it to your customer or Save and close to save it for later.

For an Existing, Unpaid Invoice:

You can also change the terms on an invoice that has already been created but not yet paid.

1. Navigate to your invoices list by going to Sales > Invoices.
2. Find the open or unpaid invoice you wish to modify and click on it to open the invoice editing screen.
3. Just as with a new invoice, click the Terms dropdown field and select the new terms.
4. The Due date will automatically update.
5. Click Save and close. If you need to inform the customer of this change, use the Save and send option to email them the updated invoice directly from QuickBooks. Communication is key when altering an existing agreement.

How to Create Custom Payment Terms

If the standard QuickBooks list doesn't cover your needs, creating custom terms is simple. This is useful for non-standard net days (like Net 20 or Net 45), terms that offer an early-payment discount (e.g., "2% 10, Net 30"), or date-driven arrangements.

Here’s the most direct way to manage all your terms lists:

1. Click the Gear icon (⚙️) on the top right.
2. Under the "Lists" column, select All Lists.
3. On the Lists screen, choose Terms. This will show you all existing payment terms, both standard and custom.
4. In the top right corner, click the green New button.
5. The "New Term" window will appear. Fill in the following fields:
   • Name: Give your term a clear, descriptive name (e.g., "Net 20" or "1% 15, Net 45"). This is what you and your customer will see.
   • Due date calculation: Choose "Due in fixed number of days" and enter the number of days for payment. Alternatively, you can have it "Due by a certain day of the month" for more complex billing cycles.
   • Early payment discount (Optional): If you want to offer a discount for early payment, check the box and provide the Discount percentage and the window for the discount in days (e.g., for "2% 10, Net 30," you would enter 2% and 10 days).
6. Click Save.

Your new custom term is now saved and will be available as an option in every terms dropdown menu across QuickBooks Online—in your company settings, customer profiles, and on individual invoices.

Final Thoughts

Effectively managing payment terms in QuickBooks Online is a simple but powerful way to control your cash flow and maintain clear communication with your clients. You can set company-wide standards, tailor terms for individual customer relationships, and easily adjust for one-off situations, ensuring your accounting system perfectly reflects your business agreements.

Keeping operational details like invoice terms organized is one part of the job; handling the complex tax questions that arise from your business activities is another. When you're determining sales tax liability for a multi-state project or the deductibility of an unusual business expense, you need fast, accurate answers. For that, Feather AI becomes your indispensable assistant, providing immediate, citation-backed answers from IRS codes and state regulations to give you complete confidence in your tax positions.