What are Unallocated Payments?

An unallocated payment is money received from a customer that has not yet been matched to a specific sales invoice in the accounting system. Common causes include payment on account ahead of invoicing, a wrong or missing reference, part-payments covering multiple invoices, or credit notes not yet applied. Unallocated balances distort the aged debtor report and should be resolved quickly by matching to an invoice or refunding.