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Chris_Accounting_2023
February 16, 2025
Solved

Unapplied cash payment with credit from between calendar years

  • February 16, 2025
  • 2 replies
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How do I resolve an issue with unapplied cash payment on P&L between calendar years? Example below:

 

  • Received payment on 12/27/24.
    • Payment was $1375, instead of what it should have been ($1350)
  • Invoice created on 1/1/25 for $1350
  • Matched payment to 1/1/25 invoice and used extra $25 as future credit
  • Received payment on 1/24/25 for $1350 (asked customer to pay less since there was the $25 credit)
  • Invoice created 2/1/25 for $1375
    • Tenant's lease increased in Feb. 2025 hence the 1375
  • Applied $25 credit to 2/1 invoice so customer shows $0 balance appropriately. 

 

2024 P&L report shows 

   Unapplied Cash Payment Income1,375.00 

 

2025 P&L report shows

   Unapplied Cash Payment Income

-1,375.00 

 

When I click on "Unapplied Cash Payment Income" on the 2024 P&L it shows the full list all payments in 2024. My understanding is this is because the payments were received before the invoices were created but I can change the invoice dates to resolve all of those except the Dec/January issues. That seems easy enough. Is this recommended? 

 

How should I resolve the issue on P&L report for when the customer overpaid between the calendar years? This should be a one off issue so prefer to keep fix simple. 

 

Thanks in advance

Best answer by Rainflurry

I was trying to keep the invoices synced up with the month that the rent is due. Though it would be better and cleaner to track that way. If rent is due on Feb 1, have the invoice created on Feb 1. 

 

So for the specific example where I received the overpayment in December for January rent, your suggestion is change date on the January invoice to be before payment was received. Does the February invoice also need backdated to December 2024 since I got the extra $25 then? 

 

Yes, I have noticed the canned responses between the few questions I've asked or when I've searched existing questions from other users. It is very frustrating and odd that continues to happen.  


@Chris_Accounting_2023 

 

"I was trying to keep the invoices synced up with the month that the rent is due."

 

If you do it that way, you will show the payment received, as of the date received and before the invoice date, as Unapplied Cash Payment Income.  There's nothing wrong with that, it's just how QB works.

 

"your suggestion is change date on the January invoice to be before payment was received."

 

That wasn't my suggestion.  My suggestion was to date the invoice the same day as the payment received, not before.  Again, that's ONLY if you want the income to show as regular rental income and not Unapplied Cash Payment Income.

  

"Does the February invoice also need backdated to December 2024 since I got the extra $25 then?"

 

No. 

 

At this point, I'm not even sure what you're trying to fix.  Nothing is broken and QB is working as it should.  You need to show $1,375 in income as of 12-31 on cash basis.  I thought you were concerned about seeing the term "Unapplied Cash Payment Income" on your P&L vs regular rental income.  If that's the case, then you can change the invoice date to match the payment received date and it will reclassify the amount from  Unapplied Cash Payment Income to regular rental income.  If you do that, you will still show $25 in Unapplied Cash Payment Income as of 12-31 because the customer overpaid the invoice by $25.  You can reclassify the $25 with a journal entry (JE) dated 12-31 - debit Unapplied Cash Payment Income and credit regular rental income.  Then, reverse the entry on 1-1.  

2 replies

G
GenmarieM
February 16, 2025

Hello there, Chris. Let me provide a detailed explanation of why there's an Unapplied cash payment income showing in your Profit and Loss report.

 

To begin with, unapplied cash payment income records payments received from customers that have not been applied to any sales form. It means you accepted a payment without declaring it as income on an invoice.

 

Your Profit and Loss statement shows an unapplied cash payment because the customer payment was entered before creating the corresponding invoice. This is actually a built-in feature of the system to track payments that haven't been matched to specific invoices yet.

 

Moreover, I suggest reaching out to your accountant for clarification on whether changing the date of your payments is advisable, so it won't show as an unapplied cash payment in your Profit and Loss report.

 

For a detailed information about unapplied cash payment income, feel free to visit this article: Unapplied cash payment income on your profit and loss.

 

Additionally, you can also export your reports to Microsoft Excel from QuickBooks Online if you want to use them outside of QuickBooks.

 

Furthermore, we have specialists ready to help you streamline various tasks in QuickBooks, such as processing invoice payments and managing financial reports. Our QuickBooks Live Expert Assisted service offers personalized guidance to ensure you stay organized and effectively manage your business finances.

 

I'll keep this thread open if you have other questions or concerns regarding unapplied cash payment income and managing overpayments in QuickBooks Online. The whole Community is always here to help at any time.

Rainflurry
Rainflurry
February 16, 2025

@Chris_Accounting_2023 

 

"How should I resolve the issue on P&L report for when the customer overpaid between the calendar years? This should be a one off issue so prefer to keep fix simple."

 

How about changing the invoice date to match the payment received date?  Since you're on cash basis, changing the invoice date to the payment received date will reclass the payment from Unapplied Cash Payment Income to whatever income account(s) are on the invoice.  That's proper P&L reporting on cash basis.  

C
Chris_Accounting_2023Author
February 18, 2025

I can try that for the bulk of the 2024 invoices. Is there a way to do this for all the invoices in bulk or is it a manual process? Each invoice was created using the recurring template (which is auto generated the 1st of every month).

 

@Rainflurry  My main concern for changing the date is the January 2025 one. That is for January 2025 rent, and is also the one that he overpaid on. @GenmarieM I had already applied the credit from January to the February 2025 invoice. I just changed the 2025 invoice to date of 1/20. I received most of the payment (1350) on Jan 24, 2025 and as stated, the extra $25 credit was received at the end of Dec 2024. Changing the invoice date to 1/20 didn't change anything on 2025 P&L cash. Please advise. I really don't want to backdate rental invoices to a previous year especially when the rent amount changed.

 

Thanks again

JoesemM
JoesemM
February 18, 2025

You can process them in bulk or add them individually, Chris. I'm here to share insights about the process and guide you step-by-step.

 

You can create a bulk process if the payment transaction matches open invoices. Just click the box beside the Description column.

However, if the payment transaction doesn't match an open invoice, you need to add them manually. Just select the open invoices under the Outstanding Transactions column. For more details about the process, click this article: Unapplied cash payment income on your profit and loss.

 

You can also verify the accounting method you've used. Please note that each method reports your income and expenses differently. Once you change your accounting method, accounts and balances in your reports might show up differently. For more details, open this link: Choose between cash and accrual accounting methods in QuickBooks Online.

 

I'll add these articles that will guide you in recording payments to proper accounts and reconciling them so they always match your bank and credit card statements:

 

 

Keep me posted in the comment section below if you have questions about recording unapplied payments or concerns regarding QuickBooks. I'm always here to help you.

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