Incoming cash dilemma

I received the below commentary when preparing our annual accounts that I am confused by. Can anyone help explain how I would see this kind of discrepancy? I tag everything religiously so don’t understand how something is not tagged to a sales invoice unless it was an internal transfer etc.

All payments are received electronically so its not possible to not tag an incoming payment. Any suggestions how this might be possible without just assuming it is income when I have no way of even reviewing it? Any opinions welcome.

“Your bookkeeping is showing £XXXX received from customers which has not been booked to sales invoice. This can happen from bank tagging. It is very important that all incoming cash from customers is allocated to a sales invoice or you use the option to generate a sales invoice when tagging the bank receipt. Elsewise, a situation such as this has arises. Basically you have received more money than you invoiced and we need to treat that as income unless you can demonstrate otherwise”

You can try the following that may show up items tagged as prepayments…sales—view clients—search—tick options prepayments
This is from memory so hope you can follow this

This likely means payments that you’ve tagged as “payment from a customer” then “pay down multiple invoices” then not fully (or not at all) allocated to specific invoices, which means they’ll have been recorded as pre-payments on account. You can find the specific payments by doing sales → all payments, then advanced search and set the type to “unallocated”.

Once you find them you can work out whether there are corresponding unpaid invoices and it just hasn’t linked correctly, or if you need to create extra invoices. Either way once you have matching unpaid invoices created then go through them in order from oldest to newest and log payment → apply from credit on each one.

Thank you for such a quick response - pointed me to the problem.

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Thanks for the detailed response which is very helpful.

HI @ian_roberts
I always seem to have trouble locating the " log payment from credit" so thanks …I will make a note of this myself for the future.

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