What are unallocated payments in simple terms?

Unallocated payments are money received by your business that hasn't been matched to a specific invoice or customer account. They appear in your accounting system but aren't assigned to any particular transaction, making it difficult to track which customers have paid and which invoices remain outstanding.

Why do unallocated payments occur in my business?

Unallocated payments typically occur when customers pay without referencing invoice numbers, make partial payments, pay multiple invoices with one transaction, or when there are timing differences between when payments are received and when they're processed in your accounting system.

How do I identify unallocated payments in my accounting system?

In most accounting systems, unallocated payments appear in your bank feed as unexplained transactions. You'll find them by reviewing your bank account transactions and looking for payments that show as 'Unexplained' or haven't been allocated to any invoices or categories.

Can unallocated payments affect my tax returns?

Yes, unallocated payments can impact your tax returns if they represent taxable income that hasn't been properly recorded. Leaving payments unallocated may result in understated income for tax purposes, potentially leading to compliance issues with HMRC.

How often should I review and allocate payments?

You should review and allocate payments at least monthly, ideally weekly. Regular allocation helps maintain accurate cash flow records, ensures customers' accounts are up-to-date, and prevents the accumulation of unexplained transactions that become harder to identify over time.

What should I do if I can't identify an unallocated payment?

If you can't identify an unallocated payment, check bank statements for additional reference information, contact customers who have outstanding invoices, review payment timing against invoice dates, and consult your accountant if the payment remains unexplained after thorough investigation.

Do GoForma's accountants help with unallocated payments?

Yes, GoForma's dedicated accountants help identify and resolve unallocated payments as part of our monthly accounting services. We review your transactions, help match payments to invoices, and ensure your accounts remain accurate and up-to-date throughout the year.

How can I prevent unallocated payments in future?

Prevent unallocated payments by including clear invoice numbers on all invoices, setting up payment references in your accounting system, educating customers about payment references, using payment links that automatically match to invoices, and processing payments promptly when received.

What are Unallocated Payments?

An unallocated payment meaning refers to money received by a business that hasn't been matched to a specific invoice or customer account, creating a temporary credit balance until proper allocation can be determined and processed through your accounting system.

Published Apr 13, 2021

Last updated Jan 29, 2026

5 min read

Written by Jordan MaceyAAT

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<p>Unallocated payments are where the client has given you more money than they owe.</p>

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What are Unallocated Payments?

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