I can't make inactive because it says cust. is on a recurring template. But the customer isn't on a template/recurring transaction.

I understand the importance of managing your customer list in QuickBooks Online (QBO). Allow me to share insights about this matter, Maxx.

At this time, we are actively investigating an issue affecting users trying to set customers as inactive. They have reported encountering the same error message you received that states the customer cannot be deleted because it is being used by a recurring template.

Our engineers are working diligently to identify the root cause of this error and determine the best course of action to fix it. In the meantime, I recommend contacting our Customer Support Team so they can add you to the list of affected users. This way, you'll receive email updates on the investigation's status and be notified once it's resolved. I've included the steps to contact them below. 

1. Click Help.
   
   
   
   
2. Tap the Search tab and select Contact Us.
   
   
   
   
3. Enter INV-108794 in the designated box, then hit Continue.
   
   
   
   
4. You may choose to Chat with us or Have us call you.
   
   

We understand the importance of this functionality for your operations and are committed to providing a solution as quickly as possible. We appreciate your patience and will keep you updated on our progress. If you have other questions, please post them below. I'll be around to help you out, Maxx.

@CamelleT 

RE: I understand the importance of managing your customer list in QuickBooks Online (QBO)

That you understand the obvious is not helpful. No one cares.

RE: They have reported encountering an error message that states the customer cannot be deleted because it is being used by a recurring template. 

Even if the message was accurate, it's a stupid rule. Who cares if there's an active template? Since deleting in QuickBooks Online isn't really deleting in any case, but making the name hidden/inactive, it shouldn't matter. It doesn't in QuickBooks Desktop. This is just another example of what's wrong with QuickBooks Online, even when it's working properly.

RE: I recommend contacting our QuickBooks Support Team so they can add you to the list of affected users.

The OP already did that. You are the QuickBooks Support team. See...?