Undeposited Funds

The Undeposited Funds Acct (UDF) is the default account for all money that comes in.  From there it is moved to whatever the appropriate account is through the Bank Menu and Make Deposit.

It's a carry over from the days when everything was cash or check and often the actual deposit into the bank could be days later.  Think of a business that receives check payments for invoices or cash payments throughout the week.  Those payments are recorded in the "books" as an increase in the Undeposited Funds Acct as the payments come in.  Then on Friday, the owner goes to the Bank and makes one deposit.

So as you receive payments/donations, you are entering them and that "cash" is going into QBs Undeposited Funds Acct.  Now days the payment may go directly into the bank or it may still come by check, Credit Card or whatever.  You just need to go into the Banking Menu and Make Deposit that matches what is really happening in your accounts.

If you get 5 checks and you take them to the bank as one deposit.  Check off those 5 checks, pick the Bank Acct they are going into and Save the entry.  If a single payment went in as an ACH, show that single deposit from UDF to the bank account.

If everything is entered correctly, the UDF account will go back to $0 and the various deposits should match the date and amount on your Bank statement.  (e.g.  five checks deposited together totally $100 should show up as one deposit for $100)

As for all the deposits that were left in the UDF Acct....  I saw the total, but it doesn't say how many actual entries in the UDF Acct there are.  So this may take a while.  If there are only a few, then I've got a fast fix, but this is probably the one you'll want to use.

• Use the Bank, Make Deposit option and enter all the March Deposits.  Then Delete the duplicate deposits that are in there now.
• For the others, wait until you have done your March Reconciliation
• If you have a backup solution for QBO, make a backup!  (This is why I really like QB Desktop!)
• Print multiple Reports and make note of the UDF and Bank Acct Balances
• Per Below...  Make a couple of changes, THEN CHECK BALANCES AND THAT PAYMENTS ARE STILL CONNECTED TO THE CLIENT/DONATOR (however you track them)
• Go to the old Deposits and click on the Payments button (Top)
• ADD the correct payment to each deposit
• DELETE the existing detail lines so only the new payment you just added is there
• Save
• Check Balances

After you have done a few it will make sense.  Just remember to stop every week, month, whatever you want to make sure you're still in balance and the correct UDF items are being attached to the correct Deposits.  You'll want to rush through it, but if you do a miss click or typo, it could triple your time trying to find your error.

Also, this should not affect any prior Reconciliations.  So double check that, but if you have new unreconciled items back where you shouldn't - STOP and find the error.

There are about 15,000 transactions in the undeposited funds account that go back to 2009. If I try to delete any of them they say I can't delete them them because the funds have been deposited. If they've been deposited, I just can't figure out why are they still in undeposited funds. Everything else balances, but when I generate a balance sheet there is a line item for undeposited funds of over $300k that were long ago deposited into the bank account and then spent. 

Thanks for getting back here, @Melbird23.

This error occurs when you try to make changes to the transactions that are associated with the Undeposited Funds. You'll have to delete first the Bank Deposit before you can make changes to the payment.

Here's how:

1. Go to the Gear icon.
2. Click Chart of Accounts.
3. Look for the account and tick View Register.
4. Look for the Deposit and right-click Delete.
5. If you want to delete a specific payment, select it from the list.
6. Next, select the Edit tab at the top menu bar.
7. Hit Delete Line.
8. Then, Yes to confirm your changes.

For your reference, please see this article: How to Use the Undeposited Funds Account to Receive Payments in QuickBooks Online.

Also, since this includes old transactions, I recommend consulting our account to guide you in clearing your Undeposited Funds account. This is to ensure that your books and accounting data are accurate. If you don't have one, use our Find an accountant tool to look for a Pro-Advisor near you.

You can always seek self-help articles on our QuickBooks help articles page, to get your bookkeeping and accounting task done in no time. 

Let me know how this goes and leave a reply below if you have further questions about managing your Undeposited Funds account. I'm always here to help. 

Thank you. If I delete the bank deposit, won't my bank account balances then be wrong? Currently the balances for bank accounts are all correct. 

Hi, @Melbird23.

Yes, deleting the deposit will affect your bank balance. However, you can correct it by recording the desired transaction/s you need. As mentioned by DivinaMercy_N above, you can connect with a professional accountant for proper tracking of your accounts.

On the other hand, you can open this link for more tips about recording payments and deposits.

Moreover, you can check out the topics from our help articles for more hints and resources while managing your transactions in QuickBooks.

If you have any other questions about your deposit and accounts, please let me know by adding a comment below. I'm always here to help. Keep safe!