Handling Unapplied Payments

The Unapplied Cash Payment Income and Unapplied Cash Bill Payment Expense accounts are special Cash Basis accounts that QuickBooks Online creates and uses automatically. Under IRS reporting rules, these accounts are required when payments are entered into QuickBooks Online, but are either not connected to an Invoice or Bill or the payment is dated before the Invoice/Bill that it is attached to.

Read more details on these accounts at https://community.intuit.com/articles/1146009-what-s-unapplied-cash-payment

In the MBO to QBO sync there are a few situations where this might occur:

Pre-payments

Most can agree that being paid early is an issue business owner would love to have, but being paid early is one reason Member payments can show in the Unapplied Cash Payments Income account.

When members make a payment before the system charges their membership account QuickBooks sees a payment dated before the invoice. Under the cash basis reporting, QBO must report that payment as income but doesn’t know how to categorize it until it is linked with an invoice. During the time between the payment date and the invoice date this payment is reported under the Unapplied Cash Payments Income. On the date of the Invoice, QBO will show a negative in the Unapplied Cash Payment account for the same amount of that payment to show the income being moved from that account to the correct income category according to the invoice.

Tip: Any negative amount shown in this report will be a transaction that is attached to a payment.

For Example:

Amy knows that her membership is due on January 24th, so she stops by to make a payment on January 13th. The result of these two transactions in the Unapplied Cash Payments is a net of $0 and will be reported as shown below. (The date range of the report might need to be expanded to include both Payment and Invoice dates)

  To Fix:

This is not wrong, but can cause some confusion.  If you do not want to see payments and invoices show in Unapplied Cash Payments, the date of the Invoice can be changed to before the payment date (as the payment shows when the member made their payment, it is not recommended that the payment date be changed). This will remove both transactions from reporting under the Unapplied Cash Payments.

Payment Not Linked

On rare occasions the sync between MBO and QBO does not link the payment and invoice. In these instances, the Unapplied Cash Payment account will show the payment, not the invoice.

To Fix:

While looking at the Unapplied Cash Payments report

Click on the Amount of the transaction you wish to fix

Check the box for the Invoice you wish to connect the payment to

Click Save and Close

Initial Sync

When initiating the Sync with QuickBooks Online a start date for the sync is selected. Transactions that occur after this start date will be added to QuickBooks online while transactions before this date are not automatically added. In some situations, this can cause that member payment made after the sync date to be added into QuickBooks while the Invoices/Charges for membership dated before this date are not.

To Fix:

The missing Invoice(s) will need to be added to QBO. All payments shown in the Unapplied Cash Payments will be associated with a member. 

1. Determine which member has a payment in the Unapplied Cash Payment.
2. Log into MBO
3. Search for that Member
4. Find the Invoice charge date associated with that payment (this will be a Debit on the member’s account)
5. In QuickBooks Online, click the Plus icon and select Invoice
6. Select the appropriate Member and enter the charge date, product/service, and amount.
7. Click Save (not Save and Close)
8. At the top of the Invoice page, click Receive Payment
9. Link the Invoice to the existing payment (Tip: the Amount Received should show $0.00)
10. Save and Close

Related Articles

What’s Unapplied Cash Payment? -  https://community.intuit.com/articles/1146009-what-s-unapplied-cash-payment