Credit memo was applied to an invoice. Why is the invoice showing unpaid?

Welcome to the Community space, @kpmullins.

If a credit memo isn't linked to the correct invoice in QuickBooks Online, the invoice will appear as unpaid. I will share some insight below as to why the credit memo was applied to the invoice, but it shows as unpaid.

To begin, we need check the customer invoice to see if it was applied correctly to the invoice. Here's how:

1. At the left navigation panel go to Sales.
2. Click Customers and locate the specific customer you want to view the invoice.
3. Verify if the credit is applied correctly to the invoice.

Additionally, if the Automatically apply credit feature is turned on in QuickBooks Online, it's possible that the credit note was automatically applied to a different invoice, causing it not to apply to the intended one. Let’s check to see if this could be the case.

To turn it off Automatically apply credit:

1. From the Settings icon, select Accounts and Settings.
2. Navigate to the Advanced tab.
3. In the Automation section, click Edit.
4. Toggle off the Automatically apply credits.
5. Click Save, then Done.

After disabling the automatic application, re-apply the credit memo to the specific invoice using the Receive Payment tab.

This adjustment should help resolve the issue.

Moreover, you can refer to this article to learn how to handle customer overpayments: Manage a customer credit or overpayment in QuickBooks Online.

Additionally, I'm including this article to guide you in running the Customer Balance Detail report. This will allow you to check if the customer has any existing credits or balances. Simply navigate to Reports and type in Customer Balance Detail.

Furthermore, have you considered our QuickBooks Live Expert Assisted? They specialize in streamlining revenue and financial management, and I highly suggest exploring their services. Their expertise could significantly improve your accounting processes and offer you essential support.

You can always post your reply here in the Community if you have additional questions regarding managing your customer's credits or invoices in QuickBooks Online (QBO). Take care!