Apply Unapplied Payments in QuickBooks Online: A Complete Guide

Apply Unapplied Payments in QuickBooks Online: A Complete Guide

When running the Profit and Loss report using a cash method, users may find the Unapplied cash payment income status on their screen. Such accounts are generated by QuickBooks for reporting the tax and they cannot be changed or deleted from its place. However, you can fix this unapplied payment in QuickBooks. Let’s read more and learn with us how to apply unapplied payments in QuickBooks Online.

This complete guide illustrates the meaning of Unapplied Cash Payment including its two account types. In addition, you will learn how to apply an unapplied payment in QuickBooks Online.

What is Unapplied Cash Payment?

When you report on a cash basis, you may find the two unapplied cash payments accounts. These accounts are generated by QuickBooks Online automatically for reporting the cash. In addition, these accounts cannot be changed or deleted. The two unapplied cash payment accounts are as follows:

Unapplied Cash Payment Income: This type of account is used for reporting the cash basis income received from the customer payments but does not apply to the sales form. In simple words, Unapplied cash payment income is an amount you take in but did not declare it on the sales form.

Unapplied Cash Bill Payment Expense: This account is equivalent to the Cash payment income account. However, it is at the expense. This account is used for reporting the cash basis expense from the supplier payment cheques that you send but does not apply to the supplier bill.

In case you wish to record or apply the unapplied payment, QuickBooks allows you to do that. In further detail, we will explain how to apply unapplied cash payments in QuickBooks Online.

How to Apply Unapplied Payment in QuickBooks Online?

Unapplied cash payment income can be spotted on the report in two different scenarios: For instance, when your customer prepaid you and you record this payment before generating the sales form such as sales receipt or invoice. Moreover, if you enter the payment without matching it with the sales forms.

To apply unapplied payments in QuickBooks Online, you require to create the invoice in QuickBooks. First of all, you have run the report of the open invoices. Then, you need to check if your payment transaction matches the open invoice. In case the payment transaction does not match the open invoice, you can create the transaction manually.

Find out how to apply an unapplied payment in QuickBooks Online in the following series of steps:

Step 1: Get Started with Open Invoice Report

In the first step, you will have to make sure that the Open Invoice matches the Payment transaction. For this, you need to run the Open Invoice report in QuickBooks. You can go through the following steps to know more:

  • Click on the “Reports” menu.
  • Then, add the “Open Invoices” in the “Find report by name” field.
  • Here, you need to set a period for your report and then click on the ”Run report” button.
  • Now, move to the “Transaction Type” section.
  • At this point, you need to find the transaction available in the list as a “Payment”.

In case the Payment transaction matches with the Open Invoice then you can move to the next step (Step 2). But, if you don’t find the open invoice match with a payment transaction, jump to Step 3 directly.

Step 2: When the Payment Transaction Successfully Matches to the Open Invoice

After running the Open Invoice report, if you find the payment transactions matched with the open invoice, you are required to follow these steps:

  • Click on the “Payment Date” to open the invoice.
  • Then, check your open invoice from the “Outstanding Transactions” section.
Payment Transaction Successfully Matches to the Open Invoice
  • Press the “Save and Close” button.

Now that you have checked and saved the open invoice, you will not find any unapplied payments in QuickBooks Online. However, if the payment transactions were not matched with the Open Invoice then you need to switch to the next step.

Step 3: When the Payment Transaction Does Not Match the Open Invoice

In this step, you are required to create a transaction because the payment transaction could not match the open invoice. To apply unapplied payments in QuickBooks Online, you can follow these instructions:

  • Click on the “+New” button.
  • Then, click on the “Invoice” option from the “Customer” section.
  • Here, you can enter the required details with the same amount, customer, and payment date.
  • Hit the “Save and Close” button.
  • Now, return to the “Open Invoices” report.
  • Locate the unapplied payment and then click on the date to open it.
  • At this point, you need to check your open invoice from the “Outstanding Transactions” section.
  • Press the “Save and Close” button.

Once done following these steps, you can check the Open Invoice report to find out if there are any other transactions available as a Payment. If so, you can repeat Step 2 for each transaction.

After that, you can run the Profit and Loss report and this time, you will not spot any unapplied payments as you have applied them already.

Final Words

Users often encounter unapplied payments income while running the Profit and Loss report. This happens because you have either entered the payment without matching it with the sales forms or you recorded the payment before generating the sales form such as sales receipt or invoice. By following our guide, you can easily learn to apply unapplied payments in QuickBooks Online. In case the transactions do not match, you can simply create the transaction to avoid conflicts.

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