Handling Unapplied Payments
An unapplied payment is a payment sitting in QuickBooks that is not attached to an invoice. You will usually notice it either as a payment on a member’s account marked Unapplied, or as a balance in an account called Unapplied Cash Payment Income that you did not create.
There are three reasons this happens, and they need completely different things from you. Work out which one you are looking at first.
Which of the three is it?
| What happened | What you need to do |
|---|---|
| The member paid before their charge posted | Nothing. It sorts itself out. |
| They paid off something they bought before you started with FlexBooks | A decision for you and your bookkeeper |
| A payment should have linked to an invoice and did not | A two minute fix in QuickBooks |
To tell them apart, find the member and look at what they bought. If the purchase is there in QuickBooks and simply is not linked, it is the third. If the purchase happened before your FlexBooks start date and is not in QuickBooks at all, it is the second. If the purchase is dated after the payment, it is the first.
1. The member paid before their charge posted
Members on a membership often pay ahead of the date their charge actually posts. QuickBooks then has a payment dated earlier than the invoice it belongs to, and on a cash basis it parks that money in Unapplied Cash Payment Income until the invoice catches up.
You do not need to do anything. When the invoice posts, QuickBooks shows a matching negative amount and the money moves to the right category on its own.
Example. Amy pays on January 13th for a membership due January 24th. Run the report across a date range covering both and the two net to zero.
Tip. Any negative amount on this report is a transaction attached to a payment, so a report that nets to zero over a full period is behaving exactly as it should.
2. They paid off something they bought before you started with FlexBooks
FlexBooks starts on a date you chose, and it does not bring across balances your members already owed on that date. So when someone pays off an old balance, the payment syncs but there is no invoice in QuickBooks for it to attach to.
Before you fix this one, read Customer Balances From Before You Started With FlexBooks. There is a decision underneath it that only you and your bookkeeper can make, and it is worth making once rather than member by member.
The short version: creating the missing invoice records that income in QuickBooks now. If that income was already recorded in whatever books you kept before FlexBooks, you have just counted it twice. If it was never recorded, creating the invoice is right. Only you know which, and if you are not sure, ask whoever prepares your taxes before you start.
Once you have decided that creating the invoice is correct for you:
- Identify which member has the unapplied payment.
- In Mindbody, find the original purchase and its date.
- In QuickBooks, create the missing invoice (+ New > Invoice) with that date, product and amount.
- Click Receive Payment and link it to the payment that is already there. Amount Received should show $0.00.
3. A payment should have linked to an invoice and did not
Occasionally the sync does not link a payment to the invoice it belongs to, and the report shows the payment with the invoice sitting unpaid alongside it.
To fix it:
- Open the Unapplied Cash Payments report and click the transaction amount.
- Tick the box for the invoice it should connect to.
- Click Save and Close.
If this keeps happening rather than being a one-off, tell us. That is not something you should be fixing by hand every month. See Troubleshooting Missing, Duplicate, or Unmatched Transactions.
Clearing a backlog that has built up
- Run the Unapplied Cash Payment Income report for all dates.
- Take each positive balance and work out which of the three cases above it is.
- Link it, create the missing invoice, or leave it alone accordingly.
- Re-run the report to confirm what is left is only prepayments that have not posted yet.
What the Unapplied Cash Payment account actually is
You do not need this to fix anything above, but people ask.
Unapplied Cash Payment Income and Unapplied Cash Bill Payment Expense are special cash-basis accounts that QuickBooks creates by itself. QuickBooks uses them when a payment has been entered but is not connected to an invoice or bill, or when a payment is dated before the invoice it applies to. They are not accounts you should post to directly, and they are not a sign that something is broken.
Intuit’s own explanation is here: What’s Unapplied Cash Payment?