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dsoniat
Level 2

How to fix unapplied cash bill payment expense?

I noticed items missing from my Expense report by vendor.  I've traced these to several situations with unapplied cash bill payment expenses.  I see why they happened, because the bill payment check was dated earlier than the bill.  

It seems like all the recommended fixes appear to say to go back and "check the box" to show the payment is applied to the bill.  However, in each of my cases the box is already checked for the appropriate bill...and each bill says there is an associated payment.

I believe I literally  put each bill into QB before entering the check, but unfortunately dated them incorrectly.

Could I just go change the dates of each bill to prior to the check date - would that fix it?  would that be a proper correction?

(note: these are all in periods which have been reconciled).

thanks - David
Solved
Best answer February 02, 2020

Best Answers
katherinejoyceO
QuickBooks Team

How to fix unapplied cash bill payment expense?

Thanks for coming to the Community, @dsoniat. I appreciate you for sharing detailed information on your concern. 

 

Yes, that's the proper correction as Unapplied Cash Payment shows when you enter a bill payment before entering the bills. You can change the dates of each bill and ensure that they're dated before the bill payments even they are all reconciled. 

 

However, it would be best to consult your accountant before doing it especially when you're using accounting method (Cash or Accrual basis) for your business to make sure your books are accurate. 

 

For your reference, read through these help articles to learn more: 

 

 

Let me know if you'll need help with anything else. I'm always around to guide you some more. 

View solution in original post

20 Comments
katherinejoyceO
QuickBooks Team

How to fix unapplied cash bill payment expense?

Thanks for coming to the Community, @dsoniat. I appreciate you for sharing detailed information on your concern. 

 

Yes, that's the proper correction as Unapplied Cash Payment shows when you enter a bill payment before entering the bills. You can change the dates of each bill and ensure that they're dated before the bill payments even they are all reconciled. 

 

However, it would be best to consult your accountant before doing it especially when you're using accounting method (Cash or Accrual basis) for your business to make sure your books are accurate. 

 

For your reference, read through these help articles to learn more: 

 

 

Let me know if you'll need help with anything else. I'm always around to guide you some more. 

View solution in original post

dsoniat
Level 2

How to fix unapplied cash bill payment expense?

Thanks @katherinejoyceO   Changing the dates of the bills fixed the issue and the expenses now appear on the report.

 

David

Doug9149
Level 1

How to fix unapplied cash bill payment expense?

This also fixes my issues, but honestly I don't understand the reasoning for the functionality being this way. So we are penalized for paying the bill off early and made to do extra work? That seems dumb. 

 

Can someone explain to me why this works this way? 

cheeks622
Level 2

How to fix unapplied cash bill payment expense?

I have a client who, like myself, prefers to overpay by double or triple on invoices for regular expenses to create credit balances and reduce the likelihood of incurring late fees.  How should those be addressed going forward?  Do I need to create expenses to A/R and date the bill payments that match them for the invoice date?  Will I always see these balances if we continue to manage our bill payments this way?  The aging below is accurate, but the P&L detail report doesn't reflect this.image.png

ReyJohn_D
Moderator

How to fix unapplied cash bill payment expense?

I can share a couple of options on how to handle bill prepayments in QuickBooks Online, @cheeks622.

 

You can create either a check or an expense to the vendor and record it to your Accounts Payable (A/P) account. This way, the balance will decrease until you're ready to enter the final bill. Before doing so, I recommend consulting an accountant to know which option is best for you.

 

To create a check or an expense, here's how:

 

  1. Click the +New button, and then select either Check or Expense under the Vendors section.

  2. Choose the Payee, and then go to the Category details drop-down.
  3. Select Accounts Payable (A/P) on the Category column.
  4. Fill out other needed info, and then hit Save and Close to confirm the action.

Once done, enter a bill. Let me guide you how:

 

  1. Tap the +New button again, and then choose Bill.
  2. Enter the Vendor name in the drop-down, and then choose A/P account again in the Category column.
  3. Fill out other necessary details, and then click Save and Close.

Then, you may now apply the prepayments to a bill. Here are the steps how:

 

  1. Go to the Expense menu, and then choose the Vendors tab.
  2. Locate the vendor name, and then open the bill associated with it.

  3. Click the Mark as paid button, and then make sure the bill in the Outstanding Transactions and the expense under the Credits section are checked.
  4. Hit Save and Close.

To track all the bill prepayments you've made, you can pull up the Vendor Balance Detail report. Let me show you how:

 

  1. Go to the Reports menu at the left pane.
  2. Choose Vendor Balance Detail under the What you owe section.

Also, you can personalize it to show the info you need. For more info, please review this article: Customize reports.

 

Please let me know if you need more help regarding this or have other QuickBooks concerns. I'll be here to lend a hand. Have a good one.

cheeks622
Level 2

How to fix unapplied cash bill payment expense?

Thank you for your help. My question was more about how I'm affecting the P&L than how to create the records, though. Am I to infer from your answer that the proper method to record prepayments without creating an Unapplied Cash Bill Payment Expense balance is indeed to record the A/P expense to match the bank statement and apply bill payments dated the date of the bills as they come in?

Kristine Mae
QuickBooks Team

How to fix unapplied cash bill payment expense?

Let me explain how the process works, Cheeks622.

 

There are two accounting methods (Cash and Accrual) in QuickBooks Online. The Profit and Loss report will provide a different picture depending on the method you pick.

 

You can follow the recommendation of my colleague. Although, when you record the A/P transaction, it will still affect the Profit and Loss report in the Cash accounting method only. 

 

Let me share some articles that can help you:

If you have additional questions, please feel free to leave a comment below. We'll reply as soon as we can. 

cheeks622
Level 2

How to fix unapplied cash bill payment expense?


@Kristine Mae wrote:

Let me explain how the process works, Cheeks622.

 

There are two accounting methods (Cash and Accrual) in QuickBooks Online. The Profit and Loss report will provide a different picture depending on the method you pick.

 

You can follow the recommendation of my colleague. Although, when you record the A/P transaction, it will still affect the Profit and Loss report in the Cash accounting method only. 

 

Let me share some articles that can help you:

If you have additional questions, please feel free to leave a comment below. We'll reply as soon as we can. 


I believe the report I attached shows I'm reporting on a cash basis (at least, that's the setting I chose in the Account Settings menu when I set her up), so I'm pretty sure I'm seeing the report I intend to see. 

 

Was your colleague's recommendation that I can avoid generating these Unapplied Payment balances by creating checks/expenses booked to A/P and dating the bill payments for the date of the invoice?  Not to be obtuse, but I haven't gotten an explicit answer as to whether this methodology is right or wrong, just instructions on reporting and entering expenses, bills, and payments.  Should I just play around with the record types and dates and see what the effects are?  I'm billing this client by the hour, so I don't want her to have to pay for my trial and error as I figure out how to give her accountant useful books.

 

 

ShiellaGraceA
QuickBooks Team

How to fix unapplied cash bill payment expense?

Thanks for getting back to us, @cheeks622.

 

I have some information about the unapplied cash bill payments. The steps shared by my colleague @RayJohn_D are ways on how to record a bill payment when it's not applied to a bill yet. It is an account that QuickBooks automatically created for cash-basis reporting. This account will show up in your Profit and Loss report when:

 

  • a bill payment for a vendor is recorded before entering the bills
  • if you entered bill payments without matching them to bills

What to do if you see this account on your profit and loss? You'll have to go to the Pay bills page to match the bill payment. If you don't see the matching bill for this payment, create it. Check out this link for more information. 

 

Feel free to leave a message for me if you have other questions or concerns. I'm more than happy to assist you every step of the way. Take care and have a wonderful day ahead.

 

 

 

 

 

 

cheeks622
Level 2

How to fix unapplied cash bill payment expense?

So I played around with entry methods and discovered that in recording only with Bill Payments, the portion on the bill payment allocated to the prepaid expense shows up as unapplied on the P&L, and when using Expenses booked to A/P, the entire transaction shows as unapplied. The paid invoices for the reporting period still show in the appropriate account, so I can deduce that the Unapplied Cash Bill Payment Expenses account shows the presumed amount of prepaid expenses based on the transaction date and the applied payments succeeding that date on the transaction itself.

It would explain why the entire Expense amount would show (no applied payments on a reduction to accounts payable) and only shows the prepaid amount on Bill Payments, even when Bills from future dates are checked off (Bill Payment has applied Bills with dates preceding and succeeding the Bill Payment date). For my purposes, I can see that the recording of Expenses and matching them to Bills as Bill Payments suggests that the entire amount paid was not previously due, and if I do want to accurately demonstrate the amount of genuinely prepaid expenses on my P&L I need to record Bill Payments. I can give my client context for this and tell her that it's not a line item that works in tandem with the expenses she knows they eventually paid unless she has an outstanding credit balance at the end of the reporting period.

Not for nothing, I should mention that for clients using Classes to separate income and expenses, going the Bill Payment route doesn't always accurately allocate the Classes, so some research will be needed to massage a P&L before presenting. A possibly cleaner solution is to record the Bill Payment and apply the Bills up to the payment date and record an Expense for the unbilled portion of the transaction to A/P and classify that line item. It's a little more work upfront for an easy (or easier) to read P&L later.

 

Hope this helped the next person.  Have a great weekend everyone!

Achim B
Level 2

How to fix unapplied cash bill payment expense?

Hi, 

I'm sorry, but payment date and invoice date are given, how can they be manually changed only to be able to match the two? 

Besides, what's the problem if payment date is earlier than invoice date? I imported the payment through the online banking feature, I matched payment to invoice, but still it shows up as 'unapplied expense' on the P&L. 

I would appreciate an explanation that helps to fix this problem. 

Best regards, 

Rasa-LilaM
QuickBooks Team

How to fix unapplied cash bill payment expense?

Thanks for joining on this thread, Achim B.


We’ll have to make sure the payment and bill have the same date. This way, they’ll no longer show as an unapplied expense on the Profit and Loss Report.


Before proceeding, let me share some of the reasons why the Unapplied Cash Bill Payment Expense on the financial statement.

 

  • Bill payment for a supplier is recorded before entering the bills
  • If you entered bill payments without matching them to the bills

 

To fix the issue, open the bill and bill payment you’re working on. From there,  type the correct date and (similar period).  If you get the same result, perform the recommended steps in this article: What to do if you see unapplied cash bill payment expense on your profit and loss.


I’m attaching an article to help you in the future. It outlines the complete steps on how to resolve the following: Unapplied cash payment income on your profit and loss.


Feel free to leave a comment below if you have other QuickBooks concerns or questions. I’ll be around to answer them for you. Have a good one.

Achim B
Level 2

How to fix unapplied cash bill payment expense?

Dear Rasa-Lila, 

I appreciate your quick response. However I still don't understand how I can change the dates. Payment date is written on the bank statement, bill date is written on the bill, isn't it against all accounting principles to change the transaction dates only to get items off the 'unapplied expense' category. There should be another way. 

 

If e.g. an invoice is paid on Monday, the invoice date is Tuesday, payment is matched to invoice when imported through the online banking feature, why does the transaction remain on the 'unapplied expense' category? Unless we look at the exception where Monday is in 2020, Tuesday is in 2021 and I print the P&L for 2020.  

Rgds, Achim

AileneA
QuickBooks Team

How to fix unapplied cash bill payment expense?

Hello, Achim B. 

 

Thank you for getting back to us. As mention by my colleagues above there are possible reasons why the Unapplied Cash Bill Payment Expense on the financial statement. 

 

  • Bill payment for a supplier is recorded before entering the bills
  • If you entered bill payments without matching them to the bills 

 

For example, if the invoice is paid on Monday, the invoice date is Tuesday, so the Unapplied Cash Payment displays when you enter a bill payment before entering the bills. You can modify the dates of each bill and make sure that they're dated before the bill payments. 

 

Please check these helpful articles for future reference: 

 

 

Feel free to let us know if you have other questions. Stay safe!

Achim B
Level 2

How to fix unapplied cash bill payment expense?

Dear Ailene,

 

you suggest to 'modify the dates of each bill and make sure that they're dated before the bill payments'.

 

What I don't understand: the dates are fix, bill/invoice date is printed on the bill/invoice, payment date is printed on the bank statement. How can the dates be modified?

 

If an invoice comes with a date later than the payment date, should the invoice be booked with the date of payment, basically ignoring the date printed on the invoice? Is this an acceptable accounting practise, in order to remove the items from the 'unapplied expenses' category?

 

Thanks for your help. Best regards,

Achim

AlexV
QuickBooks Team

How to fix unapplied cash bill payment expense?

Hi Achim B!

 

Let me join this thread and share some details in fixing the unapplied expense.

 

Incorrect dates can cause unapplied expenses when you run a Profit and Loss report. QuickBooks Online may not be able to recognize the payment if the date is before the bill date. Though we're unable to modify the date of the imported payment from the bank, we can update the bill.

 

Simply open the bill you recorded, and change the date. It should be on or before the payment date. If there's a prompt, just confirm it.

 

Also, you'll want to seek some guidance from your accountant regarding accounting practices or standards. You may also visit the QuickBooks Help page for more tips and tricks in managing your business.

 

Need more help? Please keep on posting here.

annieghillman
Level 1

How to fix unapplied cash bill payment expense?

What if you can't change the date of the bill? In my situation, it is for inventory, so when I try to change the bill date it says that the date I'm trying to change it to is before inventory was tracked for the item.

Jen_D
Moderator

How to fix unapplied cash bill payment expense?

Good to see you here, @annieghillman,

 

In QuickBooks Online, the system will allow you to use an item on bills on or after the "As of date" selected during the setup.

 

The inventory as of date is the period you start tracking the quantity on hand of an inventory item in QuickBooks. This is the reason why you will get an alert when you select a bill date before the item was added.

 

For this, you can edit the inventory "As of date" that matches the date of the bill. Please note that you will only have this option if you haven't used this item on a transaction.

 

You can also create another inventory item with the date that is before the bill date. This step is completely optional, and we do not recommend doing this all the time.

 

Kindly post here again if you have further questions about vendor bills and payments. I'll be right here to help you. Have a nice day!

annieghillman
Level 1

How to fix unapplied cash bill payment expense?

Thank you. So you say: "Please note that you will only have this option if you haven't used this item on a transaction."

 

What are you supposed to do if the transaction has been used already? I'm cleaning up past transactions for a new client and just discovered this.

 

Thanks!

ChristieAnn
QuickBooks Team

How to fix unapplied cash bill payment expense?

Hi there, annieghillman.

 

Welcome back to QuickBooks Community to ask for more clarification about the details shared above. 

 

Since QuickBooks Online is date-specific, you can only post transactions after the start date of the inventory item. That said, QuickBooks Online currently doesn't allow you to update the start date of an inventory item once this has been used already from different entries. Meanwhile, you'll have to create a new item dated before the bill entry will perform or been created.

 

Here's how to create a new inventory item:

 

  1. Go to the Sales menu and choose the Products and Services section.
  2. Click the New button or Add a product or service. Then, select Inventory.
  3. Add a NameSKU, or category for what you're tracking. Tip: Categories let you group your products and services together so they’re easier to find.
  4. Add your product’s Initial quantity on hand. Then enter when you started tracking that quantity in the As of date field.
  5. Add a Reorder point to get alerts when it's time to reorder.
  6. Select the Inventory asset account drop-down and select Inventory Asset. QuickBooks uses this account to track the cost of all the products you have in stock (or inventory value).
  7. Fill in the other necessary field.
  8. Hit Save and close.

 

For additional information, you can refer to this article: Add inventory products in QuickBooks Online.

 

Otherwise, I suggest consulting an accountant to help you figure out other options so your books will be accurate.

 

Please refer to this article to see various information on how the four different types of items in QuickBooks Online help you categorize the products and services for better tracking: Change product and service item types in QuickBooks Online.

 

Don’t hesitate to keep in touch with me here should you have additional questions or concerns. I’ll be here to help. Wishing you a wonderful rest for your day!

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