What is Unapplied Cash Payment Income?

Have you ever run a Profit & Loss and noticed a random income line item called "Unapplied Cash Payment Income"? What is this, and how do we get rid of it?

What is Unapplied Cash Payment Income?

Unapplied cash payment income is just that—income that cannot be applied to a specific invoice because no invoice exists, at least not as of the payment date. When something hits the Unapplied Cash Payment Income line item, it is always a result of incorrect dates.

For instance, if you have an invoice dated May 1, but the client pays one day early and the payment is posted on April 30, this amount will hit Unapplied Cash Payment Income. QuickBooks received income, but has nowhere to apply it as of April 30.

How do we fix it?

Open up the invoice and modify the invoice date so that it matches the payment date. We should avoid changing payment dates, especially if your business is using cash method for tax purposes. We also need to be careful when modifying dates around year-end. We don't want to modify anything that took place in a prior year if the books have been closed and taxes have already been filed.