Are you struggling to manage unapplied payments in your NetSuite account?
Unapplied payments are payments that have been received but not yet applied to a specific invoice. This might also refer to credit memos that have been issued but not assigned. These amounts can cause confusion and make it challenging to reconcile your accounts accurately.
If you’re not careful, unapplied payments will soon lead to a messy A/R ledger and frustrating conversations with customers. Don’t let it get this far.
Today we’ll explore how to apply unapplied payments in NetSuite and discuss best practices to help you manage these payments efficiently and effectively.
Why do I have Unapplied Payments
When payments are received through the bank from a customer they should be sent with an invoice reference. This lets the accounts receivable team know what the payment refers to.
|If your customers have issues with paying multiple invoices at once you could try the consolidated invoicing feature to streamline the process for them.
How to Post a Payment Directly Against an Invoice
If the payment is sent with a reference it can be posted in NetSuite directly against the relevant invoice.
For payments against single invoices this can be done against the invoice record by clicking the Accept Payment button.
For payments of multiple invoices, the Accept Payment link on the customer record will take you to the Payment page. From there, the user can check the invoices they want to post a payment against.
Both these actions will automatically apply the payment to the relevant invoices
How to Post Unapplied Amounts Against a Customer in NetSuite
If, when editing the Payments page, an amount is entered directly in to the Payment Amount field and no Invoices are checked, you will notice the total is flagged as Unapplied.
This can also happen if an amount is entered directly in to the Payment Amount field that is more than the selected invoices.
Finally, unapplied amounts can be the result of a standalone credit memo that was not linked directly to an invoice.
If a credit memo has been posted but not applied it will show on the customer record as follows.
The above screenshot is using the standard A/R – A/P View on the Transactions tab of the Customer record.
How to Apply Unapplied Payments in NetSuite
Applying unapplied payments follows the same process as applying new payments. Navigate to the customer record and select the Accept Payment button.
On the Payments page, navigate to the Credits tab and select the payment you want to apply.
Navigate back to the Invoices tab and select the invoice you want to apply the payment to. Notice that the total at the top of the Invoices and Credits tabs match and there is no value in the Payment Amount field.
The Payment Amount field shows no value so when we save this record no payment will be posted. This is the intention since we only want to match off a payment with an invoice. If there is an amount in the Payment Amount field then a further unapplied payment will be posted, so be careful of this.
If you are applying the payment against part of an invoice then you can adjust the amount in the far right payment column.
Once you have aligned your payments and invoices you can click Save on the payment record. Remember to check one final time before saving that no further payment will be posted!
How to Apply Unapplied Credit Memos in NetSuite
Applying credit memos is no different to applying unapplied payments. As far as the system is concerned, both are credits against the customers account and therefore warrant the same treatment. There is a secondary way to apply a single credit memo, however, that we will also cover.
Applying a Credit Memo from the Payments page
Navigate to the customer record and select the Accept Payment button.
Under the Credits tab select the credit memo you would like to apply.
Navigate back to the Invoices tab and select the invoice you would like to apply the credit to.
Notice that the total at the top of the Invoices and Credits tabs match meaning no actual payment is going to be posted. This is reinforced by the fact that there is no value in the Payment Amount field.
If you are applying the credit against part of an invoice then you can adjust the amount in the far right payment column.
Once you have aligned your credits and invoices check one last time that the payment amount field is empty and then save the record.
Applying a Credit Memo from the Credit Memo Record
If you have a credit memo posted in to an open period you can apply directly from the credit memo record as well.
Navigate to the credit memo and open it in edit mode.
Under the Items tab you will see a subtab for Items and a second subtab called Apply.
Select the transaction(s) you want to apply the credit to. Unlike the Payments page, the totals may not balance using this method. That is because the Items tab gives a tax exclusive total. You do have the tax inclusive amount to apply though.
Note that this method will not allow you to over apply and so there is no risk of accidentally posting a payment.
Once you have applied the full amount, save the credit memo and see the status change from Open to Fully Applied.
Saved Search for Customer Unapplied Payments
You can do things the right way and train your teams to take extra care but there is always going to be something that slips through the net. You might, therefore, want to come up with a periodic process to check the system for any unapplied amounts that should or could be matched off.
If you want to identify all unapplied amounts in your ledger, there is a simple saved search you can do for this.
Create a Transaction saved search with the following criteria –
In your results make sure you include at least the following fields –
Monitor your A/R KPIs more smoothly by utilizing the KPI Scorecard feature –