How to Reverse Unallocated Cash Postings on Sales Ledger

Modified on Mon, 6 Jan at 8:50 AM

Unallocated cash represents a credit balance on an account. This balance acts as a pot of cash that can be applied to settle current or future invoices raised on the account. Occasionally, you may need to reverse an unallocated cash posting due to errors or changes in how the funds need to be allocated. This guide will walk you through the steps to reverse unallocated cash postings efficiently and accurately.

When to Reverse Unallocated Cash Postings

You may need to reverse unallocated cash postings in the following scenarios:

The payment was mistakenly marked as unallocated.
Errors were made during the initial receipt or allocation process.
Adjustments are required for accurate financial reporting.

Step-by-Step Process

Access the Account
- Navigate to Accounts > Sales Ledger.
- Locate the account from which the unallocated cash needs to be reversed.
- Identify the specific unallocated cash line. Note the value in the Balance column for the cash posting you want to reverse.
Prepare to Reverse the Unallocated Cash
- Go to Receipts.
- Select the same account where the unallocated cash resides.
- In the Amount Received box, enter the value you noted earlier from the Balance column.
Execute the Reversal
- Click on Allocate Cash.
- Ensure you do not select anything from the allocation list. This step ensures the cash remains unallocated and is effectively reversed.
- Proceed by selecting Post and then Complete Batch to finalise the process.

Best Practices and Tips

Double-check the values: Before reversing, confirm the correct unallocated cash amount to avoid creating further discrepancies.
Document changes: Keep a record of the reversal for audit and reconciliation purposes.
Communicate with stakeholders: If reversing unallocated cash affects a customer’s account, notify the relevant stakeholders.
Review account history: Regularly review account activity to identify and address any unallocated balances promptly.