Payments received before bank account connected now high Undeposited Funds balance

scb2019 · ‎February 24, 2020

I have a client that used Quickbooks Online for invoicing purposes only at the beginning. Then connected account later on. But now the Undeposited Funds balance is huge from all the payments received on invoices prior to connecting bank account and matching to deposits. Is there a way for me to reconcile/clear those payments?

MarsStephanieL · ‎February 24, 2020

Hello there, scb2019.

You can use a clearing account so that your Undeposited account register will be balanced. To create a new account follow the steps below:

Go to the Accounting tab, then select Charts of Accounts.
Click the New button on the top right corner of the section.
Choose the Account Type as Bank and the Detail Type as Cash on Hand.
Enter other necessary details.
Verify and then hit Save and Close.

Then to transfer the register to your Clearing account, do the following steps below:

Go to the Accounting tab, then select the Charts of Accounts.
Click on the View Register along the Undeposited Funds.
Click on the transaction and select the Edit button.
Change the Deposit to box to Clearing Account.
Hit Save and close.

I added a screenshot for your reference.

For future reference, check out this article: Match and categorize bank transactions in QuickBooks Online.

Just click the Reply button if you need further assistance. I'm here to assist you right away. Have a good one.

View solution in original post

MorganB · ‎February 24, 2020

Hello, scb2019.

Thanks for reaching out here in the Community. I'd be glad to provide some info about the Undeposited Funds account payments.

The Undeposited Funds account is used a cash register, in a sense, to hold your money until you do make an actual deposit. These payments can be cleared from this account by creating deposit transactions in your QuickBooks Online account. I've got an article for you that offers info on how to clean up this specific account. You can check it out here: https://quickbooks.intuit.com/learn-support/en-us/undeposited-funds/what-s-the-undeposited-funds-acc...

There are several links within the text that explain how to record a deposit, and then finally reconcile your transactions.

Please feel free to contact me here if you have any other questions.

scb2019 · ‎February 24, 2020

Thank you. I understand what the Undeposited Funds account is. But my question is, since my client received payments (and when they did it selected Undeposited Funds as the deposit to) it is now sitting in that register. And to balance that register, I'm supposed to match them to deposits. BUT since the clients bank account wasn't connected when those payments were received, I have no deposit to match it too. Example: invoicing and receiving payments in 2018. Didn't connect bank account and use QBO for that until 2019. Is there a way to put all those payments somewhere to correctly balance my Undeposited Funds register and not screw up balances anywhere else?

MarsStephanieL · ‎February 24, 2020

Hello there, scb2019.

You can use a clearing account so that your Undeposited account register will be balanced. To create a new account follow the steps below:

Go to the Accounting tab, then select Charts of Accounts.
Click the New button on the top right corner of the section.
Choose the Account Type as Bank and the Detail Type as Cash on Hand.
Enter other necessary details.
Verify and then hit Save and Close.

Then to transfer the register to your Clearing account, do the following steps below:

Go to the Accounting tab, then select the Charts of Accounts.
Click on the View Register along the Undeposited Funds.
Click on the transaction and select the Edit button.
Change the Deposit to box to Clearing Account.
Hit Save and close.

I added a screenshot for your reference.

For future reference, check out this article: Match and categorize bank transactions in QuickBooks Online.

Just click the Reply button if you need further assistance. I'm here to assist you right away. Have a good one.

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Payments received before bank account connected now high Undeposited Funds balance