How do I apply unapplied cash to an invoice to show a payment received and reduce balance of invoice?

Thanks for your time visiting our forum and joining the QuickBooks Community, @courtney12,

You can record the unapplied cash as a bank deposit and assign it to the Accounts Receivables account. That way, you are able to apply it to an open invoice. The steps are as follows:

1. Go to the + New icon and choose Bank Deposit.
2. Proceed to the Add funds to this deposit section.
3. Enter the customer names in the Received From column.
4. Make sure to use Accounts Receivable for the Account so you can link it to the invoice.
5. Add a Payment Method then the respective amount you received.
   

Once you're ready to apply this deposit as a payment on the customer's invoice, follow the steps below:

1. Go to the + New icon and select Receive payment or Receive invoice payment.
2. Fill in the customer’s name, and other required fields.
3. (Optional) Fill out the fields for Payment method, Reference no, Deposit to, and Amount received.
4. Proceed to the Credits section and select the deposit you just created.
5. Add the amount you want to use in the Payments column.
6. Make sure the total to pay is correct after applying the credit memo.
7. Once you're done, hit Save and close.

You can also refer to these related articles and tutorials to learn more about the processes and tasks in QuickBooks:

• Process a credit card payment in QuickBooks Online
• Record invoice payments in QuickBooks Online
• Video tutorials for QuickBooks Online 

• How to link a deposit to an invoice?

If you have any other questions about this or need anything else in QuickBooks, let me know in the comment below. I'll be more than happy to help you in any ways I can. Have a lovely day!

Hi, by following this process would it also reduce the balance of Unapplied Cash Payment Income? As I'm assuming that AR is credited and Unapplied Cash Payment Income is debited which would reduce sales/revenue/income which is currently overstated. If this is not the case I would like to understand a bit more - our scenario is that we have consolidated deposits from World Pay a 3rd Party Merchant (we also use QB Payments too) and this causes the unapplied cash payment income - hence we are trying to understand the best way to recognize the individual payments within the merchant deposit, which should also eliminate the Unapplied Cash Payment Income.

 Thank you for joining this thread, usermichael-lamb.

Let me add some information about the solution shared by my peer.

You’re correct. The Accounts Receivable is credited and the process will reduce the overstated income or sales. Also, I recommend consulting with your accountant to check if the unapplied cash payment income will be debited. They can guide you on how to properly track payments from your World Pay a 3rd Party Merchant account QuickBooks Payments.

You can read the articles below for more details. These resources contain solutions on how to resolve the mentioned transactions.

• What's Unapplied Cash Payment?
• Unapplied cash payment income on your profit and loss
• What to do if you see unapplied cash bill payment expense on your profit and loss

Keep me posted below if you still need assistance managing the unapplied cash payments. I’ll get back to help and make sure this is taken care of for you. Enjoy your weekend.

Thanks Rasa. We did a couple of transactions via receive payment and the balance in unapplied cash payment did not reduce per our expectations, would you know why this is the case? The deposit to account listed is the main checking account.

Thanks for getting back to us, Michael.

Unapplied Cash payments are payments made before the invoice date it's applied to.

An example of this is that you've received a payment today and the invoice is created the next day. It's an unapplied payment since the payment hits your books before the invoice.

Since you've received a couple of payments, you'll want to ensure those payments are applied to an invoice before the payment date. This way, it'll correct the amount in your unapplied cash payment account. You can also seek assistance from your accountant for the best action to take and ensure the accuracy of your accounts.

I'm also adding these resources for more details:
 

• What's Unapplied Cash Payment?
• What to do if you see unapplied cash bill payment expense on your profit and loss

Once everything is all set, you might want to utilize this article that can guide you in seamlessly matching your accounts: Reconcile an account in QuickBooks Online.

If you have any other follow-up questions about unapplied cash or with your QuickBooks, you can always add a reply to this thread. I'll be around to assist you. Take care and have a good one!