Glossary · Invoices and billing
Unapplied cash
Unapplied cash is money received from customers that hasn’t yet been matched to the invoices it pays.
When a payment can’t be matched — no invoice number in the reference, an unfamiliar payer name, an amount that matches nothing — it is booked as unapplied cash until someone works out what it covers.
While it sits there, two things go wrong. The invoices it actually paid still look overdue, so customers may get reminders for money they have sent, and your receivables and DSO look worse than they are.
Keep unapplied cash small and young. Clear it daily if you can, and fix the cause: ask customers to quote invoice numbers, and ask for remittance advice on combined payments.
Example
A €3,150 transfer arrives referenced only “Payment”. Until finance matches it to INV-0151, the client stays on the overdue list and receives an automated reminder.