Applying a payment links the funds received to the specific invoices they are meant to pay. Until this step is done, a payment is recorded in the system but the invoices it covers will still show as open. This guide walks through applying a payment from start to finish, including how to handle situations where the payment does not exactly match the invoice total.
Steps
1. Go to Receivables. Click Receivables in the left sidebar.
2. Open the customer's payment history. On the Payments by Account tab, find the customer and click their name. This opens their individual payment list.
3. Open the payment you want to apply. Click on the payment row. This opens the Payment Distribution screen. You will see the payment summary card at the top and the Applied Items table below.
đ¸ Screenshot suggestion: The Payment Distribution screen showing the payment summary card at the top with amount, method, and date visible. The Applied Items table below is empty or partially filled.
4. Check for existing applications. If the payment has already been partially applied, the Applied Items table will show which invoices have been covered and how much remains. If the table is empty, no application has been made yet.
5. Click Apply to Items. Click the Apply to Items button. This opens the Apply Payment screen, which shows all open invoices for this customer.
đ¸ Screenshot suggestion: The Apply Payment screen showing the five-tile summary bar at the top (Payment Total, Previously Applied, Applying Now, Credits Applied, Open Balance) and the invoice list below.
6. Review available credits. If this customer has any approved credit memos with an open balance, they will appear in a collapsible section above the invoice list. You can select a credit memo to apply it alongside the payment, which will reduce the amount the payment needs to cover.
7. Select the invoices to apply the payment to. Check the box next to each invoice you want to apply this payment toward. As you select invoices, the Applying Now tile at the top updates to show the running total being applied.
You can also use the auto-apply shortcuts if available:
Oldest first â applies to invoices in order from oldest to newest
Largest balance â applies to the largest outstanding invoice first
Exact match â applies to any invoice whose balance exactly matches the payment amount
đ¸ Screenshot suggestion: The invoice list with two invoices checked, showing the Applying Now tile updated with the running total and the Open Balance tile showing the remaining unapplied amount.
8. Adjust the applied amount per invoice if needed. By default, the full invoice balance is applied when you check an invoice. If you want to apply a partial amount to a specific invoice â for example, if the customer paid most of an invoice but not all â you can edit the amount in the Applied column for that row.
9. Confirm and save. When you are satisfied with the allocation, click Save or Apply. The applied invoices will update their balances, and the payment's open balance will decrease by the amount applied.
â ď¸ Warning: You cannot apply more than the total payment amount. If the Applying Now total exceeds the payment, the system will show an error and prevent you from saving.
After Applying
Return to the Payment Distribution screen to confirm the Applied Items table now shows the invoices you selected with the correct applied amounts. If the payment amount exactly matched the total applied, the payment balance will be zero. If funds remain, the amber unapplied funds notice will appear.
đĄ Note: If a payment has leftover funds after full application and the customer overpaid, you can issue a refund from the unapplied funds callout. See How to Handle an Overpayment.