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How to Find Unapplied Payments in QuickBooks

· 7 min read
Debits

Introduction​

Unapplied payments in QuickBooks occur when a payment has been recorded but not applied to an invoice or bill. These unapplied payments can cause discrepancies in your financial records, affect your accounts receivable and payable, and create confusion when reviewing reports like the Profit and Loss statement. It's crucial to locate and resolve unapplied payments to maintain accurate financial reporting and ensure your books are up to date.

In this guide, we'll walk you through the steps to find unapplied payments in QuickBooks Online and QuickBooks Desktop, as well as how to resolve them.

Why Are Unapplied Payments a Problem?​

  1. Financial Discrepancies: Unapplied payments can lead to inaccurate financial statements, especially if the payment is not linked to the appropriate invoice or bill.
  2. Reporting Errors: When payments are not applied, reports like the Profit and Loss statement, Balance Sheet, and Accounts Receivable/Accounts Payable aging reports will not reflect accurate data.
  3. Customer Confusion: Unapplied payments can confuse customers, showing them outstanding balances even though they have already made a payment.
  4. Unbalanced Accounts: Incomplete transactions can leave your accounts receivable or payable unbalanced, which can complicate end-of-month or end-of-year reconciliations.

Step 1: Find Unapplied Payments in QuickBooks Online​

In QuickBooks Online, you can easily find unapplied payments through the Unapplied Payments or Credit Memos report.

1.1: Run the Unapplied Payments Report​

  1. Log into QuickBooks Online: Open your QuickBooks Online account and ensure you're in the correct company file.
  2. Go to Reports: In the left-hand navigation menu, click on Reports.
  3. Search for the Unapplied Payments Report: In the search bar, type "Unapplied Payments" or "Unapplied Cash Payment Income." This report will show any payments that have been received but not applied to an invoice.
  4. Set the Date Range: Adjust the date range to view unapplied payments for a specific period (e.g., last month, last quarter, or year-to-date).
  5. Run the Report: Click Run Report to view the list of unapplied payments.

1.2: Review the Report​

The Unapplied Payments report will show the following information:

  • Customer Name: The name of the customer or client who made the payment.
  • Date: The date the payment was received.
  • Amount: The payment amount.
  • Unapplied Balance: This column shows the amount that has not been applied to an invoice.

1.3: Locate Unapplied Credits​

If your customer has overpaid or you've issued a credit memo, the credit may remain unapplied. Here's how to locate unapplied credits:

  1. Go to Sales: In the left-hand menu, click Sales, then select Customers.
  2. Open the Customer's Profile: Click on the name of the customer who has unapplied payments.
  3. Check for Unapplied Credits: In the Transaction List of the customer's profile, check for any unapplied credits or payments.

1.4: Resolve Unapplied Payments in QuickBooks Online​

Once you've identified unapplied payments, you can resolve them by applying them to the appropriate invoice:

  1. Go to the Customer's Profile: In the Customers tab, select the customer with the unapplied payment.
  2. Open the Unapplied Payment: Click on the unapplied payment or credit.
  3. Apply the Payment to an Invoice: In the transaction window, choose the correct invoice to apply the payment to. Once done, click Save and Close.

Step 2: Find Unapplied Payments in QuickBooks Desktop​

For QuickBooks Desktop users, unapplied payments can also be located through specific reports and customer transaction lists.

2.1: Run the Open Invoices Report​

The Open Invoices report helps you find payments that haven't been applied to any invoice.

  1. Open QuickBooks Desktop: Log into QuickBooks Desktop and open your company file.
  2. Go to Reports: Click on Reports in the top menu.
  3. Select Customers & Receivables: In the dropdown menu, select Customers & Receivables, then click on Open Invoices.
  4. Set the Date Range: Adjust the report’s date range to find unapplied payments within a specific time period.
  5. Run the Report: The Open Invoices report will display all open invoices and any payments that have been recorded but not applied.

2.2: Find Unapplied Credits and Payments​

Another way to find unapplied payments is through the Customer Balance Detail report.

  1. Go to Reports > Customers & Receivables: Click on Reports, select Customers & Receivables, then choose Customer Balance Detail.
  2. Review the Report: This report will show you a list of customers, along with any open balances, unapplied credits, and unapplied payments.
  3. Look for Unapplied Payments: Check each customer for unapplied payments or credits, which will appear in the report.

2.3: Resolve Unapplied Payments in QuickBooks Desktop​

Once you have located unapplied payments in QuickBooks Desktop, you can manually apply them to invoices:

  1. Go to Customers: In the top navigation bar, click on Customers, then select Receive Payments.
  2. Select the Customer: Choose the customer with the unapplied payment from the drop-down list.
  3. Locate the Unapplied Payment: QuickBooks will display a list of open payments and invoices for that customer.
  4. Apply the Payment: Check the box next to the correct invoice to apply the payment. Once applied, click Save & Close to update the records.

Step 3: Review and Reconcile Unapplied Payments​

After applying payments to the correct invoices, it's essential to review your reports again to ensure everything has been reconciled correctly.

3.1: Check the Accounts Receivable Aging Summary​

To ensure all payments are applied and your accounts receivable is accurate, run the Accounts Receivable Aging Summary report:

  1. Go to Reports: In QuickBooks Online or Desktop, navigate to Reports.
  2. Search for Accounts Receivable Aging Summary: Run the report to see any outstanding invoices and ensure no unapplied payments are affecting the aging balances.

3.2: Reconcile Your Accounts​

Once unapplied payments are resolved, perform a reconciliation to ensure all transactions are correctly recorded and applied.

  1. Go to Reconcile: In QuickBooks Online, click Accounting, then Reconcile. In QuickBooks Desktop, go to Banking > Reconcile.
  2. Choose the Bank Account: Select the bank account associated with the unapplied payments.
  3. Reconcile the Account: Compare your QuickBooks records with your bank statement to ensure everything matches.

Step 4: Troubleshooting Common Issues​

4.1: Payment Not Showing Up in Reports​

  • Issue: The payment isn’t showing up in the unapplied payments report.
  • Solution: Ensure the payment was entered correctly in QuickBooks. It may have been mistakenly applied to the wrong invoice or marked as a deposit.

4.2: Unapplied Payment or Credit Cannot Be Resolved​

  • Issue: The payment or credit cannot be applied because the original invoice is missing.
  • Solution: Create the missing invoice or transaction and then apply the payment to it. If the invoice was mistakenly deleted, recreate it using the same information.

4.3: Unapplied Payments Affecting Financial Reports​

  • Issue: Unapplied payments are skewing your Profit and Loss or Balance Sheet reports.
  • Solution: Apply all unapplied payments to the appropriate invoices or bills. If the payments were for overpayments or advances, apply them to future transactions or create a credit memo to balance your accounts.

Best Practices for Managing Payments in QuickBooks​

  1. Regularly Review Reports: Frequently review your Open Invoices or Unapplied Payments reports to ensure no payments are left unapplied.
  2. Reconcile Monthly: Perform monthly reconciliations to keep your accounts accurate and up to date.
  3. Apply Payments Immediately: Whenever possible, apply payments to invoices as soon as they are received to avoid leaving any payments unapplied.
  4. Work with Your Accountant: If you're unsure how to handle unapplied payments, consult your accountant to ensure your financial records are correct.

Conclusion​

Finding and resolving unapplied payments in QuickBooks is essential for maintaining accurate financial records. By regularly checking for unapplied payments and applying them to the correct invoices, you can ensure that your accounts receivable, financial reports, and customer balances are accurate. Follow the steps outlined in this guide to locate unapplied payments in both QuickBooks Online and QuickBooks Desktop, and take corrective action to keep your books balanced.