I am seeing Unapplied Cash Payment Income on my Profit & Loss whenever a customer pays before the invoice date. Payment is applied to invoice. How do I fix report?

Hello there. 

Let me provide some information about the unapplied cash payment income shown on your Profit and Loss report.  

The unapplied cash payments are usually shown if the payment was created as a bank deposit, then applied to an invoice. This will show up in the report until the payment date of the invoice, and not the deposit date of the bank deposit.

Also, the payment date is the date when you applied the deposit to the invoice. If the payment date is not within the reporting period of your Profit and Loss, it will be recorded as an unapplied cash payment income.

For more information about unapplied cash payments and how to get rid of them, you can read this article: What's Unapplied Cash Payment?

You can always reply or reach out to us again if you need anything else with QuickBooks. We're always here to guide and assist whenever you need help. Have a good one!

I have no idea how to fix this. Please help!!

We'll have to run the Open Invoices report and apply the payment to the open invoice, Nancy132. Let me help and walk you through how to accomplish these tasks.

The Unapplied Cash Payment account is created by QuickBooks Online (QBO) for cash-basis reporting and cannot be deleted or modified. These are the following reasons why you see the account on the financial statement:

• 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.

When you're ready, let's go ahead and build the report and apply the payment. Here's how:

1. Go to Reports on the left panel and enter Open Invoices in the Find report by name field.
2. On the report's page, set the correct date range and choose Run report.
3. In the Transaction Type column, look for a transaction listed as a Payment.

If the payment transaction matches an open invoice, perform Step 2 found in this article: Unapplied cash payment income on your profit and loss. If you don’t see a matching open invoice, go directly to Step 3.

We'll have to pay the bill if you see an unapplied cash bill payment expense on your financial statement. If you don't find a matching bill for one of your bill payments, you'll have to create the bill. Here is an article that details all the necessary steps to fix the issue: What to do if your profit and loss report shows unapplied cash bill payment expense.

I've also included an article that goes over how to fine-tune the data and style on your financial statements: Run reports. It goes into great length regarding the general report preferences and includes a few references to the various report elements.

You can also bookmark the Community page's link in your browser for later use. It covers topics such as how to manage taxes, payroll, inventories, and other accounting-related processes.

Keep in touch if you still have questions about unapplied cash payments or other product concerns. I'm always ready to respond to them.

Dear  Rasa-LilaM,

As stated in the question there are NO Open invoices. Therefore, running the Open Invoices Report will not work in this case as all Invoices show up as Paid. Hence my issue. How do I go about cleaning this account up? 

QBO's treatment of payments applied to invoices dated after the payment is wrong. If you set the date range of the P&L to include the date of payment and date of invoice then the unapplied payments zero out. Quickbooks Desktop handles this correctly. QBO does not and I don't see them making any adjustments to correct this.

I am also seeing this in my Unapplied Cash Payment ledger. I have several instances of my customers paying before the invoice date, it is always for recurring invoices. The payment has been applied correctly, it just happens to be before the invoice date. My workaround is going back to each item on the Unapplied Cash Payment list and adjusting the date of the invoice. I don't know what kinds of problems this will create but I figure it can't hurt the invoice as it has already been paid and closed. I am only moving it by a couple of weeks. 

If someone can direct us on how to handle pre-payments, that would be really great!

I have a customer who overpaid an invoice in 2022.  The credit was applied to an invoice in 2023, however the amount of that invoice that was now paid, is showing up under unapplied cash payment.  Is there no way to correct this?  The payment was reconciled in 2022, and I don't want to change the date of the 2023 invoice to 2022 or it will throw off the P&L for both years.  Seems ridiculous that QB can't correctly apply a credit without throwing other things off.

I can share some information about unapplied cash payments, @cguio.

If you run a report, the two accounts for unapplied cash payment are automatically created by QuickBooks Online for cash-basis reporting and cannot be deleted or changed. The invoice will be unapplied until the invoice hits the books.

You can refer to this article for more information about unapplied cash payment: What's Unapplied Cash Payment?. 

Here's a detailed guidance on how to run and customize reports in QuickBooks Online. 

Let me know if you need more help with your reports and invoices or anything else. I'm always here to assist. Have a wonderful day! 

Thank you for your response.  The payment has been applied to the most recent invoice.  It's still showing up as unapplied cash.  Any other suggestions to correct the problem?

Thank you for the response.  The payment has been applied to the most recent invoice, and it's still showing up as unapplied cash.  Do you have any other suggestions for how to fix this problem?  

I'm here to help and provide clarifications regarding the unapplied cash that shows on your report, cguio.

The payment will remain unapplied because the credit and invoice dates are from separate years. I suggest consulting your accountant for advice on how to handle them, so your report will reflect accurate data.

I've listed a few links below that contain instructions on how to clear out unapplied cash payments, income, and bill payments:

• What to do if you see unapplied cash bill payment expense on your profit and loss
• Unapplied cash payment income on your profit and loss

Feel free to browse the Community page for resources to help you with your accounting tasks and tools to grow your business. From there, choose the articles and topics that address your concern. 

Reach out to me again if you require further information about the unapplied cash payments or have other QuickBooks concerns. I'd be delighted to help you. Have a good one. 

Maybe this will help someone else, since there doesn't seem to actually be much help from QB on here.  Looks like if you do a journal entry and credit the amount from Unapplied Cash Payment, and then debit that amount from Services (or whatever category you used for the invoice) it should remove the amount from unapplied cash and put it where it belongs.  Quickbooks really needs to fix this issue.  Customers shouldn't have to spend time figuring out a workaround for a faulty problem with QB.

The problem with that is now revenue is understated.