Summary

Payments are applied to open invoices. A single payment can pay one invoice or several. The Close Date of a payment is when the money "hits" the bank — you can close it the same day, or wait until the end of the week when you take cash and checks to the bank.

Key Points

You can add a payment from several places:

From the customer's Invoices tab.
From within an invoice.
From Create New… → Payment.
From Sales → Payments.
View all payments received in Reports → Income.

Add a payment from the Invoices tab

From the Dashboard, click Customers.
Find the customer who made the payment and double-click their name.
Click the Invoices tab.
Find the invoice to pay.
Click the down arrow next to the Edit button, then click Pay.

This opens the New Payment dialog. (No matter how you start a payment, this dialog is the same.) Along the top you'll see the customer's name, account number, and the balance due. Then:

Date — the date you received the payment.
Closed Date — the date of deposit (only appears if you close payments manually; hidden if you close them automatically).
Method — cash, check, etc. Important: if the customer has a credit card on file, select that card (at the bottom of the drop-down) to charge it. Selecting plain
Credit Card does not charge the card on file — it's used to record a payment taken through a credit-card service other than Stripe. To trim this list, see Settings — Payment Methods.
Amount.
Reference # / Receipt # — to help track the payment, type the date plus the customer or check number, e.g., 06-04-17 check #123.
Distribute Payment — if one payment covers multiple invoices, click this to spread it across as many invoices as the payment allows. Note the Unapplied amount next to the Amount box: to pay a single invoice, type that amount in the box to the right of the invoice; the unapplied amount then drops to $0.00.
Click Save & Apply.