Why does a credit card payment to us show up in the register as undeposited funds?

Hi there, @timpiercefilms.

Let me share some insights about the Undeposited Funds account in QuickBooks Online (QBO).

The UF account is a temporary account that QuickBooks uses to hold received payments from invoices before you deposit them in the bank. 

You will see this as the default "Deposit to" account when you receive payments from invoices, use a payment item on an invoice, or enter a sales receipt.

It's possible that your credit card payment was recorded under this account. That's why it is showing in the register.
 

To correct your records, simply deposit the payment to the right bank account. Let me show you how:

1. Go to the Accounting menu and select Chart of Accounts.
2. Look for the Undeposited Funds account, then click View register.
3. Select the transaction and click Edit.
4. Under the Deposit to drop-down list, choose the correct bank account.
5. Click Save and close.

I'd also like to give you these articles for additional guidance and reference about using the Undeposited Funds account in QBO:

• Learn About the Chart of Accounts in QuickBooks
• Record And Make Bank Deposits in QuickBooks Online

Please know that you can always reply or reach out to us again if you have other questions. We'll make sure that everything is sorted out.

I think I understand but I am not choosing to temporarily place any transactions anywhere. I feel this is very confusing and misleading. These UDFs are from Credit Card Transactions only and they assign themselves to UDF. why can't they be accounts receivable or payments received? Why UDF designation. I am not temporarily placing these there as so many forums state that they are in UDF till you decide what to do with them..... it is not part of my workflow to temporarily place them anywhere. These are credit card transactions that are made from me taking the info from the client or them deciding to pay me on their own thru the invoice. WHy when I accept the transaction does it go to UDF? I am not looking for a temporary holding account. I want them to go into my bank account register as MONEY in or accoounts receivable or payments. Any designation other than UDF is fine. THank You for any reply and clarification.

Very confused. These are credit card payment to me from clients. are you saying these are not going to my bank account when we accept them?

The UF account is a temporary account that QuickBooks uses to hold received payments from invoices before you deposit them in the bank.

I am not looking for a temporary holding account. Why would I need a temporary holding account on a transaction that is a payment to me from a client's credit card that is automatically set up to go to my bank account?

Thanks for getting back to us in Community, @timpiercefilms. Let me share some insight about undeposited funds in QuickBooks Online.
 

Until you physically deposit the same payments at your real-life bank, the Undeposited Funds account keeps a record of payments in QuickBooks. Banks will combine all of your deposits into a single transaction. You can do the same in QBO once you have your deposit slip and know which payments your bank combined.

Put payments into the Undeposited Funds account until you're ready to combine them. You can combine payments from undeposited funds into a single record after you have your deposit slip. This way, the system will always match your bank records.

This process ensures that QBO always matches your bank records. However, since you don’t want to use a temporary holding account, I’d suggest choosing your bank instead of choosing undeposited funds.

In addition, here's an article you can read to learn more about undeposited funds in QuickBooks Online: What’s the Undeposited Funds Account?

Moreover, I’ll share with you these resources to further help you with managing your undeposited funds in QBO:

• Deposit payments into the Undeposited Funds account in QuickBooks Online
• What are Bank Deposits in QuickBooks?
  
  

Keep me posted if you still have questions or concerns with managing your account. I'll be around for you. Have a great day!

I don’t think she is choosing undeposited funds. Quickbooks is actually putting them there automatically. This has been confusing to me as well because if a customer pays by credit card, the invoice is paid right then and there and should be linked to invoice as a payment.  I understand this as a payment by check, but these are credit card payments made by the customers. Then when they show up with bank feed they should match. It gets confusing having them sit in undeposited funds because the payment by credit card has already went through. Whereas, being held in Undeposited Funds for a check makes sense because it’s not made until we know that is doesn’t bounce while depositing at the bank. These credit card payments through Quickbooks makes more sense to be Accounts Receivable because the bill is paid at that moment of transaction. So you haven’t answered the question really. These credit card payments are not something we take to the bank physically to be deposited. It might be a day or two to show up on bank feed. The transaction is complete at the moment the credit card is processed and therefore; has been a received payment on an account (Accounts Receivable). This makes sense to me not sure why it doesn’t to Quickbooks?   

Credit card payments don't go directly to the bank, they go through a card processor (QB, Square, Stripe, Paypal, etc.) even if only for a split second. Most are hours or overnight or whatever, but it is technically UDF until that processing finishes, at which time there should be a "Deposit" type transaction showing the money leaving UDF and going into your bank account (less any fees). I printed out the "Transaction List by Date" report under the last section of reports, and it helped me grasp the process much better. 

HOWEVER, I'm still here for a reason. My actual funds are doing what they're supposed to, but the books are not. The amounts are added to Undeposited Funds at the payment transaction, but then again in a "Sales Receipt" transaction type. At the deposit stage the amount is subtracted from Undeposited Funds and split between the bank account and the service fees, but since it was added twice, one of those amounts is still in UDF and never goes away. It essentially doubles my assets on my balance sheet with a large account that I don't have. 

Every "Sales Receipt" transaction type is adding an amount to the Undeposited Funds account and the Services account, and neither of those are accounted for on the left side of the ledger. While the payment and deposit types balance each other for UDF, the Sales Receipt is a standalone and never gets balanced. As if all that isn't fun enough, my Services revenue is triple what it should be because Invoice, Sales Receipt, and Deposit all add the same amount to it, so it gets 3 credits for every sale.

As much as I've dug into this to find out what is happening, I still don't know why or how to fix it. 

Hi there, @HonorBuilt. Let me share the steps on how to trace these transactions. This way, we can identify the next action to resolve your issue.

To clarify, did you enter your sales on invoices, sales receipts, and deposits separately? In QuickBooks Online (QBO), invoices and sales receipts are the two different ways to record sales transactions depending on when you receive the payments.

•  For a deferred payment, we use Invoice and Receive Payment. First, you create the invoice to record the sale. Later, when your customer pays, you record a payment against that invoice. Additionally, if you deposit a payment from the Bank Deposit screen instead of receiving payment on the invoice, the payment won’t be linked to the invoice.
• For an immediate payment, we use Sales Receipts.

I recommend checking the Audit Log report. Using this report, you'll know how and who added the transactions, as well as the history of changes made to each of them.

Here's how:

1. Go to the Gear icon.
2. Select Audit Log.
3. You can use the User, Date, and Events filters. filters to narrow down the data.
4. Click Apply.
5. Look for the transactions.
6. Under the History column, click View to open the audit history. This tells you who made the change and what they did.
7. You may also click the transaction link to open it. Make sure you have the correct account selected in the Deposit to field. See the screenshots below.

I've also got a couple of articles that will help you in finding transactions:

• Use the Audit Log
• Find, Review, and Edit Transactions in Account Registers
• How to Search for Transactions

Feel free to add a comment below if you have further questions. I want to ensure everything is sorted out. 

My invoicing is done through a 3rd party software that syncs with QB (Markate). I have never created a transaction of any type in QB manually, but according to the audit log I created every one of them. I did some more experimenting with reports and discovered that I only have 3 sales receipt transactions, all of them appearing in the past month, so I'm not sure why that suddenly started happening. 

Going into last year, I'm looking at October as an example. There are 5 payments that debit the UDF account; the transaction list and UDF register agree. However there are also 5 deposits, and while my bank statement is correct and reconciled, the UDF register never credits those so it just keeps adding up. 

Separately my Service account keeps gets debited if someone sneezes on it, so my revenue numbers are at least 200% high at this point. Every single report I pull is useless because they're basically made up of random numbers at this point.

Hello again, @HonorBuilt.

Thank you for keeping us in the loop. I appreciate you for checking the Audit log. 

Creating an invoice and sales receipt for the same sale will cause duplicate revenue. To fix this issue, delete the sales receipts and keep the invoices. I still recommend seeking professional advice from your accountant about this. If you don't have one, you can visit the ProAdvisor site to run a search.

Here's how to delete a sales receipt:

1. Go to Sales and then All Sales.
2. Find the transaction. In the Action column, click the dropdown and select View/Edit to open it.
3. If you want to include the date and reason, enter that info in the Memo or Message section. Then, select Save.
4. Click More in the footer. Then, select Delete.
   
5. Choose Yes to confirm. 

You have two options to handle the invoice payments. You may edit and choose the appropriate account or keep them in the Undeposited Funds (U/F) account and deposit them. 

Beforehand, let's first delete the deposits that weren't taken from the U/F account. Follow these steps:

1. Go to the Gear icon, then Chart of accounts.
2. Find the bank account you put the deposit into and select View register.
3. Search for the bank deposit and select it to get more details.
4. Click Delete.
   

Then, if you prefer the first option, follow these steps to edit your invoice payments:

1. Go to Sales and then All Sales.
2. Find the transaction. In the Action column, click the dropdown and select View/Edit to open it.
3. Select the appropriate account in the Deposit to field.
4. Click Save and close.

Otherwise, start over and create a brand new deposit. All payments in your U/F account appear in the bank deposit window. Make sure to select them:

1. Select + New.
2. Select Bank Deposit.
3. From the Account ▼ dropdown, choose the account you want to put the money into.
4. Select the checkbox for each transaction you want to combine.
5. Make sure the total of the selected transactions matches your deposit slip. Use your deposit slip as a reference.
6. Select Save and close or Save and new.

Let me know if you make another discovery. I'll be happy to help you some more. Have a wonderful day!

I agree with you and am very frustrated.  I DO Not understand how to get them out of undeposited funds account.  Why are they even filtered through there? I have followed all of these so called solutions and I don't understand any of it.  Did you find a solution?