Advertise here    

QuickBooks Forums      

Go Back   QuickBooks Forums > QuickBooks Software Support > QuickBooks FAQ

Thread Tools Rating: Thread Rating: 54 votes, 4.98 average. Display Modes
Old 10-24-2010, 07:53 PM
PennyLane PennyLane is offline
Registered User
Join Date: Sep 2010
Location: Nevada City, CA
Posts: 112
Do you have Unapplied Payments or credits?

Resolving Unapplied Payments and the Significance

One issue that many people – including bookkeepers – are not aware of is the way unapplied payments and credits in QuickBooks can affect your Financial Statements. I am talking about payments you have received from customers that were “received” in QuickBooks by using the received payments window, (or credit memos created) but not applied to an invoice during this process, or credit memos prepared but never applied to an invoice.

It is important to know that unapplied customer payments and credits will not show up as Income on your Cash-Basis Profit and Loss report. Even if you have created an invoice and received a payment, if the payment is not applied, your Income will be under-stated!

This could have some serious consequences if you bring your Profit and Loss report to your tax professional and ask them to estimate your income taxes for the year so far and you have a $30,000 customer payment that is not showing up as income. This ACTUALLY happened to one of my clients!

How could this happen? Normally, a customer payment will apply automatically to any outstanding invoices in the received payment screen. However if you create the invoice after you receive the payment, or for some reason void the original and re-create it, the payment often will not be applied. When you are receiving payments, it is also important to be sure that a check-mark appears next to the invoice you want to apply it to.

A quick way to find out if you have any unapplied payments is to run a report called “Open Invoices” under Reports – Customers and Receivables. If you see any negative numbers on this report you have payments or credits that are not applied as in this example:.

Fortunately, this potentially disastrous situation is easily reconciled:

Method 1: From this report you can drill down by double clicking on the negative number (if it is a payment) and once the received payment window pulls up, you can put a check mark next to the invoice you would like to now apply it to, save and close – you’re done.

If it is a credit memo, or you have a whole list of credits to apply to one invoice simply open the “received payments” window and type in the customer name, but leave the received amount as $0. Click on the “Discounts and Credits” button in the lower left hand corner and apply the out-standing payments or credits that appear in the “credits” tab. Save and close.

For interactive tutorial :

It is also important that your payments are not dated prior to your invoices, so be sure to avoid this during your regular processing.

If you receive deposits, be sure to follow a procedure that does not leave unapplied payments in your system. (see my blog article Handling Customer Payments in QuickBooks).

On the Accounts Payable side, you have a similar issue, where you do not want to have Bill “payments” made to your vendors that are not applied to a vendor Bill.

Here you want to print out a “Vendor Balance Detail” from the Reports menu – Vendors & Payables. You can apply payments to bills through the “Pay Bills” by check-marking the bill and using the “set credits” in the lower left-hand section. I often find that there is no bill and one will need to be created – just be sure to date it on or before the payment date.

Unapplied payments are more common in pre-2006 versions because the system did not offer as many prompts for applying payments and credits as the more recent versions.

A quick way to find out if you have unapplied payments or credits in your Accounts Payable or Accounts Receivable system is to run a Balance Sheet report on a Cash Basis. If you see negative numbers in the Accounts Payable or Accounts Receivable here, you have a problem.
Penny Lane's
QuickBooks Now!
Truly Interactive, Amazingly Effective QuickBooks Tutorials.
Reply With Quote
Old 01-27-2013, 06:05 AM
Milton Gas Milton Gas is offline
Registered User
Join Date: Jan 2013
Posts: 4
applying a cred

Hi Penny

Thanks for all the info about credits. I feel that what I need isn't covered here.

I have credits (re-imbursments) on my bank statements. I have raised credit notes for them but they don't appear in my reconciliation. I have obviously missed a step but don't know what it is.

Can you help me please?
Reply With Quote
Old 01-27-2013, 06:49 PM
Henri Russell Henri Russell is offline
Registered User
Join Date: Aug 2012
Location: Texas
Posts: 3
Record Deposits report

When I click on Record Deposits, there are several deposits in this report from a year ago before I took over the books. These deposit amounts have been applied to the appropriate invoices and the deposits show up in the bank account, by whatever way they were put in ...maybe duplicated.

Is there an easy way to take these out of the "Record Deposits" or do I need to do journal entries to reverse them in some way.

I am very new o Quick Books and I am not a bookkeeper by profession but have been thrust into keeping books with QuickBooks for the time being. Any help with this will help.

Thank you,
Henri Russell
Reply With Quote
Old 05-05-2013, 04:16 PM
GoodJuJu GoodJuJu is offline
Registered User
Join Date: May 2013
Posts: 1
Receive Customer Payment Before Invoicing

I use QuickBooks Pro 5. (I know, I need to update
One of our customers sent us a check for $20,000. I received in into their account just by "Customer Receive Payment" and selected their company name. I did not select a particular job number.

Now however, we have numerous jobs that we need to now create invoices for and use that $20,000 to draw from an apply to these various Invoices.

I go in and create an Invoice and then go to receive payments and click the "Apply Existing Credits" box but it shows no credit to apply and it just accepts payment as usual and adds that amount to final account balance.

What do I need to do? Should I create all the Invoices first and then receive the $20,000 to one of the jobs? I'm actually at a loss at this point.

Any advice would be greatly appreciated.

Thank you!
Reply With Quote
Old 05-06-2013, 04:27 AM
Joe Williams Joe Williams is offline
Registered User
Join Date: Jan 2006
Location: Oklahoma
Posts: 9,384
In the QB-Pro5, you need to create a NEW liability account and then deposit the customer payment to it. Now create a Discount item that uses that account.
Create the invoice for the job and as the last item on the invoice, use the discount item and the amount of the prepayment you want to apply to that invoice.
If you upgrade to the 2013 version, you can receive the payment to the Customer and then apply it to the different Jobs for that customer.
Joe Williams
Piedmont, Ok
Reply With Quote

Bookmark and Share
quickbooks, training, tutorial

Thread Tools
Display Modes Rate This Thread
Rate This Thread:

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump

All times are GMT -5. The time now is 02:13 PM.


Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2018, Jelsoft Enterprises Ltd.
All contents copyright (c) by AccountingUsers Inc.
You Rated this Thread: