Unapplied cash payment income

Hi there, Jonathan07.

I'll provide you information credit reverts back to the overpayment thus indicating our customer paid for an invoice that wasn't yet created at the time of the overpayment and creating the Unapplied Cash Income Expense account.

If you report on a cash basis, you'll see two accounts for unapplied cash payments. These accounts are default and automatically created by Quickbooks Online for cash-basis reporting. And, cannot be deleted or changed.

The purpose of this account is to report cash basis income from customer payments that are accepted but not used to any sales form. Usually, the date of the payment is before the invoice date it's applied to. If you don't want to show the Unapplied Cash Income Expense account, I suggest changing the date or you'll need to make sure that the date of the invoice and the payment applied are the same.

For additional information, you check this article: What's Unapplied Cash Payment?. This provides details about the Unapplied Cash Bill Payment Expense.

Please refer to these articles on how to receive and categorize invoice payments and how your customers can pay their invoices online.

• Record invoice payments in QuickBooks Online.
• Send online invoices in QuickBooks Online.

Please know that you're always welcome to post if you have any other concerns. Wishing you and your business continued success.

Thank you ChristieAnn.

However, this solution isn't working but it was something I hadn't tried yet.

I don't know what to do. I have changed some of the dates on the invoices so that the payment comes in within it's inception date but I can't do that forever.

I just want to show the over-payment on the invoice it was paid for and then apply that extra (credit) to an invoice down the road WITH the date of the new invoice and not the old payment date.

For example, Invoice #1 was for $1000 but we received $1100. I want to show on the payment of Invoice #1 that we received $1100 and then when I make an invoice later, say Invoice #2, which is for another $1000, I can immediately apply that $100 to it on the day of it's inception ie the date of that application of $100 is the same date as Invoice #2. By doing this I will have gotten rid of the Unapplied Payment Income Expense account and have recorded what happened most accurately.

Is this clear?

Allow me to explain unapplied cash payment income to you, @ Jonathan07.

It's to report cash basis income from customer payments that are received but not applied to any sales form. QuickBooks will automatically create a credit for the customer you wish to add a cash payment for, so this could be used at a later time. 

Check out what's unapplied cash payment? for more details. 

The unapplied cash payment income will show based on the filtered dates of the Profit and Loss report. When you run the report at the same time as the invoice created, it will show the unapplied income. Once the amount is already applied to another invoice and you run the report for the same period it implemented, then it won’t show in the report.

Also, you can check this article about the difference between Cash and Accrual methods for QuickBooks Online: Choose between cash and accrual accounting methods in reports.

Please let me know if I can be of more assistance. You can always reach out if you have further questions. 

Thanks MaryAnn_E,

So, if I understand you correctly, I just leave it as is (even if it crosses over into another year?) and it will "right itself" so to speak?

My problem or desire is that I want the new invoices to reflect they're being paid on it's own date NOT on the date of the overpayment but maybe it's not a big deal.

Also, does having a balance in Unapplied Cash Payment Income affect my P&L statement or can I leave it in that account? 

Thanks for any and all help that you can provide.

Jonathan

Thank you so much.

I will mark this as the solution since in the end I can't do what I was hoping to do since QuickBooks doesn't work that way.

Thank you all who responded to this query.

Have a wonderful day.

P.S. I have another post coming y'all's way.

I have tried this approach so many times and it does apply the payment but it does not remove it from the profit and loss statement - as it still shows the payment and the invoice values on separate lines.  So are you saying that these items will not go ever go away in my profit and loss statement?

Hi there, @dotordway.

When running the Profit and Loss report using the Cash method, the Unapplied cash payment will show if:

• A customer prepaid you and you recorded the payment before creating the sales form (invoice or sales receipt).
• You entered payments without matching them to sales forms.

If you don't want to have the Unapplied cash payment income showing on your Profit and Loss report, here's what you'll need to do:

Step 1: Run the Open invoices report:

1. In the left menu, click Reports.
2. In the search field, type in Open Invoices.
3. Set the Report period. 
4. Click Run report. 
5. In the Transaction Type column, locate a transaction listed as a Payment.

If there's an open invoice that matches the payment transaction, continue to Step 2. But if there's no open invoice match, proceed to Step 3.

Step 2: If the payment transaction matches an open invoice:

1. Click the Payment date to open.
2. Under Outstanding Transactions, check the open invoice.
3. Select Save and close.

Step 3: If the payment transaction doesn't match an open invoice:

1. In the left menu, click the + New button.
2. Select Invoice.
3. Fill out the necessary information.
4. Choose Save and Close.
5. Run the Open Invoices report by following Step 1.
6. Locate the unapplied payment, then click the date to open.
7. Under Outstanding Transactions, check the open invoice.
8. Select Save and close.
9. Check your Open invoices report to see if there are any more transactions listed as a Payment. If there are, repeat step 2 for each one.

Once done, run the Profit and Loss report again. You should no longer see the Unapplied cash payment income. 

For more details about this, see this article: Unapplied cash payment income on your profit and loss.

In case you'd want to personalize the information showing on your report, take a look at this link: Customize reports in QuickBooks Online.

Please feel free to let me know if there's anything you need help with. I'll be glad to work with you again. Have a good one!

Hello,

I'm hoping you can help me with a question about unapplied cash and prepayment.

Let's say a customer owes $10/month. We invoice him for $10 but he sends a check for $50.

When I pull in the transactions from the bank to QBO, I have a deposit for $50 but my invoice to match is $10. How do I handle this scenario?

Thanks in advance for your help.

I can help you record the prepayment of your customer, @Chicago1.

In QuickBooks Online (QBO), we can record the deposit as receive payment. Then, enter the total amount paid in the Amount received box. I'll also include how you can match this transaction on the Banking page. That way, we can ensure that the transaction is cleared.

Here's how to re-create the payment:

1. Go to the +New button and choose Receive payment.

2. Choose customer and tick the box beside the invoice transaction.

3. Enter the total amount paid in the Amount received field. Note: After entering the amount, you'll see in the sub-total field that there's an Amount to credit, that is the excess payment of the customer.

4. From the Deposit to field, click the drop-down button, and choose Undeposited Funds.

5. Select Save and close.

Once done, you can deposit the customer's payment. I'll show you the steps below.

1. Navigate to the +New button and select Bank deposit.

2. Select the account you want to deposit the payment.

3. Tick the box beside the customer's payment.

4. Select Save and close.

Then, you can match this if the payment transaction is already downloaded on the Banking page. You can refer to the steps below.

1. Go to the Banking menu and select the bank where your customer's payment has been deposited.

2. Find the transaction with the correct details. QuickBooks will automatically detect the transactions that matched the downloaded ones from the bank. A green mark will show on the transaction.

3. Click the transaction and verify the details.

4. Select the Match button.

You can also review the process in this article: Categorize and match online bank transactions in QuickBooks Online.

When you're ready to assess your business financials, you may consider checking out this article: Reconcile an account in QuickBooks Online. This contains a video tutorial and tips on how to fix any issues during the reconciliation process.

Please don't hesitate to tag my name in the comment section below if you need further assistance. I'd be happy to help you succeed. Take care and have a blessed day!