QuickBooks Online Undeposited Funds account reconciliation

DonnaMarie3 · ‎July 02, 2025

Hello, I have a Client has been in business for 7 + years, had a Bookkeeping Service. Won't say what happened. Undeposited funds needs to be reconciled starting 2 years ago, does not want to go back any further. So I will start at the begining of the year that they do want reconciled. What do I do with the prior balance in Undeposited funds account so that it does not afftect any current reports and figures ?

Ultimately I would like to go back to the begining and do a full clean up BUT................. I will reconcile the Undeposited Funds account, Bank Accounts and Credit Card Accounts.

I saw 1 suggestion that said I should create a Clearing Account so the Undeposited Funds balance ( of prior Years ) and move the $$ so it does NOT affect any current balances & report balances ? I can move the balance with a J/E ?

Please assist. Thanks

RazzieE

Thank you for the clarification, @DonnaMarie3.

Since your client has requested that you begin fresh from 2024 and won't be providing records before that, the best approach is to treat 2024 as your Opening balance year. Here's how you can handle the Undeposited Funds (UF) account without affecting the current reports:

Create a Journal entry (JE) dated 12/31/2023 to move the prior UF balance into a temporary clearing account. This ensures the historical UF doesn't interfere with 2024 reporting, while still preserving the Audit trail.

Once the JE is in place, you can now start reconciling bank accounts, and credit card accounts from January 1, 2024, onward. Use the client's 2024 bank statement to match deposits and payments accurately.

Note: Since you don't have records prior to 2024, there may be minor discrepancies or data gaps.

I've also attached this helpful article for your future use to learn how to print or export report: How do I view, print, or export a reconciliation report.

If you have follow-up questions, feel free to leave a comment.

View solution in original post

JeraldR

Undeposited Funds (UF) is a holding account used to manage payments you've received from customers but haven't yet deposited into your bank account.

If the payment is posted to the actual bank, you need to create a bank deposit with the correct dates to clear the balance in the Undeposited Funds account. Doing this will ensure that your book record is accurate.

Here's how:

Go to the +New button on the left-side menu.
Select the option for Bank Deposit.
Choose the Bank account where the payment was deposited in the Account section.
In the Receive From section, you'll see a list of customer payments in the Undeposited Funds account. Check the box next to the payments that match the ones deposited into your bank.
Hit Save and Close.

You can use your client's bank statements when making a bank deposit to ensure they are posted with the correct dates.

After recording all received payments and clearing balances in the Undeposited Funds account, you can reconcile the account to ensure everything matches your bank records. Once done, you can then close your books for the chosen period and start fresh moving forward.

To learn more about UF and how it works, you can refer to this article: What’s the Undeposited Funds account?.

If you have any other questions about reconciliation in QuickBooks, hit the Reply button in the comments below.

DonnaMarie3

Hello, I really appreciat eyour asistance here. I am going to start in 2024 to reconcile Undeposited funds, bank accounts and credit card accounts. They have been in business about 7 years. They want me to start in 2024 and NOT GO BACK ANY FURTHER like 2023,2022,2021, etc. They won't be supplying and bank records for 2023 and prior. I do not know if it has been reconciled, I do not know the date they left off with the other BookKeeping Firm. They have not allowed me access to their QuickBooks account. I do not think my post was clear. I really appreciate your suggestions.

RazzieE

Thank you for the clarification, @DonnaMarie3.

Since your client has requested that you begin fresh from 2024 and won't be providing records before that, the best approach is to treat 2024 as your Opening balance year. Here's how you can handle the Undeposited Funds (UF) account without affecting the current reports:

Create a Journal entry (JE) dated 12/31/2023 to move the prior UF balance into a temporary clearing account. This ensures the historical UF doesn't interfere with 2024 reporting, while still preserving the Audit trail.

Once the JE is in place, you can now start reconciling bank accounts, and credit card accounts from January 1, 2024, onward. Use the client's 2024 bank statement to match deposits and payments accurately.

Note: Since you don't have records prior to 2024, there may be minor discrepancies or data gaps.

I've also attached this helpful article for your future use to learn how to print or export report: How do I view, print, or export a reconciliation report.

If you have follow-up questions, feel free to leave a comment.

DonnaMarie3

Thank You so much.

MariaSoledadG

Hello there, Donna.

We appreciate you taking the time to get back to us and inform how our solutions have positively impacted your business. This inspires us to continue delivering exceptional service.

If you have any other questions and concerns with reconciliation, you can always reply below. We're always here to assist you further.

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QuickBooks Online Undeposited Funds account reconciliation