I receive progress payments from customers before I create an invoice. This caused payments to go to unapplied cash payment income. what do I do & how to prevent?

Ensuring you're able to process your customer payments seamlessly is necessary to have the correct sales data in your account, @iconstruction_ll. I'm here to help you fix this and share some information.

In QuickBooks Online (QBO), the amounts under Unapplied cash payment income are those payments unlinked to a sales form (like an invoice). In your case, the progress payments made by your customer.

You can correct this by linking the payment to the invoice (once created). Here's how:

1. Navigate to the + New menu and select Receive payment.
2. Select the name of the customer in the Customer drop-down.
3. In the Outstanding Transactions section, check the invoice matches the unapplied payment.
4. Next, scroll down to the Credits section and check the box beside the Unapplied Payment that matches the invoice.
5. When done, click Save and close.

This article will further provide details about the unapplied cash payment income, feel free to read it: Unapplied cash payment income on your profit and loss.

To prevent this from happening in the future, you can enter the progress payments as a deposit. Just assign it to Accounts Receivable so you can apply it to the invoice once created. This won't let the progress payment go to the Unapplied cash payment income account. I'll guide you on how:

1. Click the +New menu and select Bank deposit.
2. In the Account drop-down, choose the bank account where the payments should be allocated.
3. Select the name of the customer in the Received from drop-down and select Accounts Receivable in the Accounts column.
4. Enter the amount received and select Save and close.

To apply it to the invoice, follow the steps in the receive payment process above. Just choose Deposit instead of Unapplied Payment.

If you have customers whom you invoice regularly with the same products and amount, you can make it a recurring transaction instead. For detailed steps, read this link: Create recurring transactions in QuickBooks Online.

You're welcome to post again here if you have other concerns managing your customer payments. I'm just around the corner to provide additional help. Have a good one.