I have an invoice that was paid in full and is recorded as paid. However, I also see another transaction saying that the payment is unapplied, how can I fix this?

When a customer overpays an invoice, the excess amount is automatically recorded as an unapplied payment, @MH251. This amount can later be used to reduce the balance due on their next invoice. Let's discuss your concern in more detail.

Payments will appear as a negative amount if they have been applied to an invoice, bringing the balance to zero. If you see a transaction showing a negative amount with an Unapplied status, it means that the overpayment has not yet been used.

On the Receive Payment page, the amount labeled as Amount to Credit represents what you owe to your customer. To use this, you'll have to apply it to their next invoice. Here's how:

1. Navigate to the +New. Then, select Receive payment.
2. To link the unapplied payment, choose the same customer under the Customer dropdown.
3. Select an invoice, and in the Credits section, choose the unapplied payment you want to apply.
4. Once done, press Save or Save and close.

Additionally, you have the option to record the overpayment as a credit memo.

You may also want to run a Profit and Loss report using the cash method to see unapplied cash payment income for proper tax reporting.

If you need tips and practical solutions for keeping accounts balanced and free from discrepancies, our QuickBooks Live Expert Assisted service can help you every step of the way.

Feel free to revisit this thread if you need any further clarification about managing unapplied payments in QuickBooks Online. We'd be glad to help.