How do i allocate payment received in bank against invoice?

Hello there, robinantill.

I can give you some insights in handling customer payments in QuickBooks Online.

Did you connect your bank account into the program? The manner of recording sales depends on how you manage your bank transactions.

If you’ve connected your bank into the program, you only need to wait for the payment to download, then match it to the invoice. Otherwise, you can manually record it via the Receive Payment option.

Based on how you described your situation, it seems like you’ve downloaded it into the program. It’s possible that instead of matching the payment, it's added, which is why there’s a prompt to select the 20% Vat rate.  

To successfully allocate the bank payment against the invoice, here’s what you’ll want to do:

1. Go to Banking from the left menu.
2. If there’s a possible match, you’ll see an outlined green box under the Category or Match column with a 1 record found message.
3. Click to expand the transaction to review its details.
4. If it is the correct match, choose Match under the Action column to move the transaction from the For Review to the In QuickBooks tab.
5. If it not the correct match, select the transaction row then choose to Find Other Records.

Check out this article for more details:

Add and match downloaded bank transactions [Video]

After doing so, the invoice status will change from Pending into Paid. Thus, the Receive Payment option won’t show.

Please update me on how things go, or if you’re handling your transactions in a different way. I’m here to help anytime.

Thanks for getting back, robinantill.

QuickBooks Online matches your bank transactions based on their dates and amounts. The option to only match a portion of the downloaded transaction (which in your case is the £859) is unavailable.

You need to first create a bank deposit for £773 in the program. This way the £1632 bank receipt will match to the outstanding invoice of £859 and the newly added deposit.

To create a bank deposit:

1. Go to the Create button (Plus icon), then Bank Deposit.
2. Choose the name of the customer.
3. Enter a date similar to your £1632 bank receipts.
4. Type in the £773 amount.
5. Click Save and Close.

For additional reference, check out this article:

Bank deposits

We generally don’t recommend which Category or Account type to select when creating transactions as each business' needs are different. It’d be best to consult with an accounting professional to ensure accuracy with your books during tax time.

With your Vat concern, if there aren’t taxes involved on this transaction, you can opt to select No VAT (Sales). Then proceed to matching them.

That’s it! You should now be able to record it in QuickBooks Online.

If you have other questions with the process, feel free to update this thread. I’m always here to help.