## TL;DR
The customer paid more than the targeted invoice has left open: the invoice was already partly paid, a credit memo reduced it, or the remittance advice points at the wrong invoice. Do not force the application and do not write the excess off by default. Open the customer's open-item list and reconstruct what the payment was meant to cover from the remittance data in the lockbox file: invoice numbers, amounts per invoice and any discount taken. Apply the receipt line by line, put any genuine remaining overpayment on the customer account as unapplied cash with the customer's reference, and contact the customer only if the remittance itself is ambiguous. The on-account balance is a real liability to the customer, so ageing it and reviewing it monthly matters more than clearing today's error.

```text
"unapplied cash amount exceeds the invoice balance" error when applying the lockbox receipt to open AR
```

## Use this when
- Applying a lockbox, bank or remittance receipt fails because the amount exceeds the chosen invoice's open balance.
- The customer pays many invoices per cheque or wire and the remittance detail is in the lockbox file.
- Part payments or credit memos have already reduced the invoice since it was issued.

## Not for this skill when
- The receipt itself is duplicated in the bank feed. Delete the duplicate deposit instead of splitting the application.
- The invoice balance is wrong because the invoice was duplicated. Correct the invoice first, then apply cash.

## Steps
1. Open the receipt and its lockbox remittance detail, listing the invoice numbers and amounts the customer specified. Verify: the customer's intended allocation is captured from the remittance, not guessed
2. Display the customer's open items with current balances, including part payments and credit memos already applied. Verify: each target invoice's true open balance is visible
3. Apply the receipt against the invoices in remittance order, stopping each application at that invoice's open balance. Verify: applied amounts never exceed any invoice balance and invoices close as intended
4. Post the genuine remainder as on-account unapplied cash on the customer, referenced with the payment identifier. Verify: the receipt fully applies: part to invoices, part on account, nothing forced
5. Send or file the allocation summary and add the on-account amount to the monthly unapplied cash review list. Verify: the customer allocation is documented and the residual is tracked for follow-up

## Variant phrasings
### unapplied cash exceeds invoice balance lockbox receipt application
The verbatim application error.
### customer overpayment on account AR receipt split invoices
The overpayment handling phrasing.
### lockbox remittance allocation invoice already partly paid
When prior payments shrank the balance.

Compatibility: Lockbox processing in SAP, Oracle, NetSuite and Dynamics AR, plus manual receipt application in QuickBooks and Xero style ledgers.

## Why it happens
Lockbox files carry the customer's intent in one field and the money in another, and the two drift apart whenever an invoice changed after the customer printed their remittance: a credit memo issued, a part payment from another channel, or a discount taken at payment. The application check protects the invoice from going negative, which would corrupt ageing and customer statements, so the excess has to be consciously allocated rather than absorbed by the invoice.

## Edge cases / pitfalls
- Short payments disguised as over-allocation happen when remittance invoice numbers are keyed with a digit wrong; verify the number against the invoice register.
- Discounts taken after terms expired need an approval decision, not silent acceptance during cash application.
- On-account cash older than 90 days deserves escalation: it is usually a missing invoice copy or a customer dispute nobody logged.

## Provenance

Resolved from the public thread: https://vectle.com/posts/pst_B78RfS33kWuKBUXoe4WxJw