diff --git a/corporate/lib/stripe.py b/corporate/lib/stripe.py
index 0b1ee8d6fc..1d915cba12 100644
--- a/corporate/lib/stripe.py
+++ b/corporate/lib/stripe.py
@@ -992,6 +992,17 @@ def void_all_open_invoices(realm: Realm) -> int:
     return voided_invoices_count
 
 
+def customer_has_last_n_invoices_open(customer: Customer, n: int) -> bool:
+    if customer.stripe_customer_id is None:
+        return False
+
+    open_invoice_count = 0
+    for invoice in stripe.Invoice.list(customer=customer.stripe_customer_id, limit=n):
+        if invoice.status == "open":
+            open_invoice_count += 1
+    return open_invoice_count == n
+
+
 def downgrade_small_realms_behind_on_payments_as_needed() -> None:
     customers = Customer.objects.all()
     for customer in customers:
@@ -1005,13 +1016,8 @@ def downgrade_small_realms_behind_on_payments_as_needed() -> None:
         if get_current_plan_by_customer(customer) is None:
             continue
 
-        due_invoice_count = 0
-        for invoice in stripe.Invoice.list(customer=customer.stripe_customer_id, limit=2):
-            if invoice.status == "open":
-                due_invoice_count += 1
-
-        # Customers with only 1 overdue invoice are ignored.
-        if due_invoice_count < 2:
+        # Only customers with last 2 invoices open should be downgraded.
+        if not customer_has_last_n_invoices_open(customer, 2):
             continue
 
         # We've now decided to downgrade this customer and void all invoices, and the below will execute this.
diff --git a/corporate/tests/test_stripe.py b/corporate/tests/test_stripe.py
index 5db2e09f10..b6d48bb591 100644
--- a/corporate/tests/test_stripe.py
+++ b/corporate/tests/test_stripe.py
@@ -2784,6 +2784,12 @@ class StripeTest(StripeTestCase):
                 invoices.append(invoice)
             return invoices
 
+        realm_0, _, _ = create_realm(
+            users_to_create=1, create_stripe_customer=False, create_plan=False
+        )
+        # To create local Customer object but no Stripe customer.
+        attach_discount_to_realm(realm_0, Decimal(20), acting_user=None)
+
         realm_1, _, _ = create_realm(
             users_to_create=1, create_stripe_customer=True, create_plan=False
         )
@@ -2822,6 +2828,9 @@ class StripeTest(StripeTestCase):
         with patch("corporate.lib.stripe.void_all_open_invoices") as void_all_open_invoices_mock:
             downgrade_small_realms_behind_on_payments_as_needed()
 
+        realm_0.refresh_from_db()
+        self.assertEqual(realm_0.plan_type, Realm.SELF_HOSTED)
+
         realm_1.refresh_from_db()
         self.assertEqual(realm_1.plan_type, Realm.SELF_HOSTED)