Unapplied payments are payments that you entered but did not apply to an invoice. These payments were applied to the Unapplied account when you entered them, so your cash receipts balance should be correct. The revenue of the unapplied payment is posted according to your cash or accrual setting.

Payments are applied to unpaid invoices with matching fees, starting with the oldest invoice. If the payment was made to an unapplied fee, the payment is applied to the oldest invoice, regardless of the invoice's fee distributions. After adding and posting an invoice, you can apply posted prepayments and unapplied payments to the invoice. If you did not select Auto Apply Payment when adding the payment, you can use the Apply to Invoices tab to match unpaid invoices with the appropriate unapplied payments.

In a Cash Environment, when you post a payment to the unapplied fee, the revenue is posted to the unapplied revenue account in the general ledger. After you post invoices and apply the payment to an invoice, the revenue moves from the unapplied account to the revenue account of the invoice. For example, a payment of $250.00 can apply to the unapplied fee. Later, when you apply the payment to an invoice, the $250.00 is deducted from the unapplied account in the general ledger and added to the receivables account of the fee on the invoice.

In an Accrual Environment, when you post a payment to the unapplied fee, the revenue is posted to the unapplied receivables account in the general ledger. After you post invoices and apply the payment to an invoice, the revenue is deducted from the unapplied account and moved to the revenue account of the invoice. For example, a payment of $250.00 can apply to the unapplied fee. Later, when you apply the payment to an invoice, the $250.00 is deducted from the unapplied account in the general ledger and added to the receivables account of the fee on the invoice.