Get rid of entries in Undeposited Funds

I'd be delighted to guide you on how to clear out your Undeposited Funds (UF) account, @GBTH.

You'll want to delete those payments from your UF account and link your deposits with your invoice. This way, the invoice will still be marked as paid and your records are accurate. Let me show you how.

1. Go to the Accounting menu in your QuickBooks Online (QBO) account.
2. Select Chart of accounts.
3. Locate your UF/Payments to deposit account and click the View register link under the ACTION column.
4. Click on the transaction and select Delete. 
5. Repeat the same process for your other transaction to clear your UF/Payments to deposit account. 

Once done, you'll want to link your deposits to your invoice. To be guided, check out this article for reference: How to link a bank deposit to an invoice.

I'd also recommend working with your accountant to ensure everything is recorded accurately. In case you've reconciled a transaction by mistake, you can refer to this article on how to resolve it: Undo or remove transactions from reconciliations in QuickBooks Online.

I'm all ears if you have any follow-up questions about clearing out your UF account or reconciling your QBO. Keep me posted by leaving a reply in this thread and I'll get back to you as soon as I can. Keep safe and more power in your business!

Thank you. Yes, I know that is the "correct" way to do it. But as I said, I don't want the correct way. All customers are marked paid, and the account is reconciled, and we have submitted our taxes.

Hi there, GBTH.

I appreciate you for coming back to the thread to add some details and ask for more clarification about your concern. With this, I'll ensure you'll be able to fix entries in Undeposited Funds so your account stays accurate.

The Undeposited Funds account will hold your customer's payments until you deposit them on your real-life bank account. Though if you made a bank deposit directly to the register and left undeposited funds pending, this may result in a duplicate income.

Sometimes, transactions show up in Undeposited Funds and appear on the Bank Deposit screen. To fix issues with amounts in the Undeposited Funds, you'll have to make a zero out the undeposited funds by creating a journal entry to offset or to get rid of entries in Undeposited Funds. To ensure your records are in shipshape, I suggest consulting an accountant before performing the process. They can provide suggestions on how to properly handle the account, especially with the category to use for the debit and credit.

Here's how:

1. Select + New button.
2. Under Other, choose Journal Entry.
3. Enter the transaction date in the Journal date field.
4. On the first line, in the Account column, select the Undeposited Funds account.
5. In the Debit column, enter the single line deposit amount.
6. On the second line, in the Account column, select the bank account.
7. In the Credit column, re-enter the single line deposit amount (if it does not already appear).
8. Click Save.

Additionally, you may refer to this article to view different details on how the Undeposited Funds account works in QuickBooks: What’s the Undeposited Funds account?.

Lastly, you can open this article to see various guidelines that can help you fix possible reconciliation issues that you might encounter: Learn the reconcile workflow in QuickBooks.

If you need further assistance with your transactions, feel free to leave a message in the comment section. I'll be happier to help. Have a great day!

Hi,

I want to be sure that I understand what's been written here. We get hundreds of memberships, and somewhere along the way, the field under Deposit to began to say "undeposited funds" rather than Wells Fargo Checking Account (see top image in attachment).

The second image on the attachment shows a listing of some membership payments that show that they were deposited to Account: Membership Dues / Split with Wells Fargo Checking and many more that show that they were deposited to Account: Membership Dues / Split with Undeposited Funds.

It looks like all of the deposits are going to the account I want them to: Membership Dues. But, the split to Undeposited Funds puzzles me, especially because I'm getting a large entry in our Balance Sheet for Undeposited Funds, consisting mainly of these membership payments. 

Do I need to keep the Undeposited Funds entries? How can I removed these from my Balance Sheet without disrupting my Membership Dues account? I want the membership dues to stay in the membership dues account, but I don't want to see the lingering amount for undeposited funds. 

If I can get rid of these somehow, can you please tell me how? Thank you!

Thanks for providing the screenshot, SueTy.

You're on the right track. I'll share some steps to get rid of the undeposited fund.

As mentioned by my colleague above, the Undeposited Funds is the temporary holding account when receiving a customer's payment. It's the default account used when the money still has not hit your real bank account. When the money is cleared from your bank, you can record a bank deposit to move the money to the actual bank.

Here's how:

1. Click + New.
2. Select Bank Deposit.
3. Choose the account you want to deposit the funds into from the Account dropdown.
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. Once done, hit Save and close.

For more details, you can read this article: Record and make bank deposits in QuickBooks Online.

Do you need help personalizing your report to display only the required information? If so, check out this resource on how you do it: Customize reports in QuickBooks Online.

Don't hesitate to reply if you need further assistance with Undeposited Funds. We're always here to help you.

Hi Giovann_G,

Thank you so much for your speedy reply! I'm still confused, though: If I create a bank deposit out of these as you say, won't I be doubling the amounts in the Memberships account, since each of the "undeposited funds" deposits is already showing up -- and being counted -- in Memberships, too?

I find it very confusing, I must say! And so appreciate your help -- does what I'm saying here make sense, especially if you look at the screen images I sent earlier? I'll send again, to make life easier. Thank you!!

Hello SueTy!

Thanks for the reply. Allow me to explain further the purpose of the Undeposited Funds.

The payments that are still in the Undeposited Funds (UF) account won't affect the balance on your bank account. When you create a bank deposit, it decreases the UF balance and increases the bank account. This means, depositing the payments from UF to a bank account won't cause duplicates cause you're simply transferring the amount to another account.

I added these links if you need more help with the Undeposited Funds account. The first article also includes links on how to deposit and reconcile your accounts:

• What’s the Undeposited Funds account?
• Deposit payments into the Undeposited Funds account in QuickBooks Online

I'd be happy to show you around the program if you have other things you need help with. Lay down the details on what you need to do and I'll gladly help you out again.