Unapplied payments is a common problem, so we recommend that you periodically check for this situation.
Whenever you receive a payment for a job, you must apply it to the job’s invoices. If you’ve created the invoice first, and then receive the payment, QuickBooks prompts you to apply the payment to the invoice. However, sometimes you’ll get a deposit or other payment before you’ve finished the work and before you’ve created the invoice. If this happens, you go back and apply the earlier payment to the invoice. Failing to apply this payment will result in Chronicle listing an outstanding balance (and an unapplied credit) rather than regarding the invoice as being paid.
To check for this situation in QuickBooks, go to the Reports menu, highlight Memorized Reports, highlight Customers, and click Open Invoices. Any customers that appear on this report with a zero balance have unapplied credits.
When you go to the Receive Payments option and pick this job, you see a screen like this:
Notice that the two invoices have no payment listed, and that the bottom right lists Unused Credits that equal the value of the invoices. (You would have the same problem if an amount was listed in the Unused Payment line.)
To correct this, click each invoice line, click Set Credits (or Auto Apply), and click Done on the credit application screen that comes up. When you are done, the Unused Credits line should show $0.00. If you were to rerun the Open Invoices report, you should find that this customer is no longer listed because, now that the credits are applied, the invoice is no longer considered open.