Unapplied cash payments are payments that were not applied to any invoices. This is also a result of an advance payment made and is recorded in the system before creating any invoices. To fix this, the following are the steps you can perform.
To start, let's run the Open Invoices report:
Navigate to the Reports menu.
From the Find report by name field, enter Open Invoices.
Set the reporting period, then select Run report.
In the Transaction Type column, look for a transaction listed as a Payment.
If that Payment transaction matches an open invoice, click the Payment date to open.
Under Outstanding Transactions, check the open invoice.
Usually, this error occurs when the transaction does not link to the correct bank account. To fix this, we can open the invoice and check to make sure it was linked to the proper bank account. Also, review the date on the Invoice window to make sure you used the correct date and not some date later than the end date of your bank statement.