My question is more about the use of it and if there are any accounting principles that would provide guidance in the use of the account in this way.
Our company has a mailbox address for check payments that we manage online.
When mail is received at the mailbox, a photo is taken of the outside of the envelope, and a notification is sent to us.
I log in to view the photo and enter a request for the envelope to be opened and scanned.
Once scanned, I can view the contents. If it is a check, I request that a bank deposit be made.
The check is prepared for deposit and it is delivered to the bank by a carrier.
The check deposit is delivered to the bank by a carrier, so it is not in the constant control of the mailbox company, however, it is trackable.
It may be several business days before the check is received and deposited at the bank due to several factors including 1) the time of day the deposit is requested and 2) the day of the week. Weekends and holidays effect how long it takes for the deposit to arrive at the bank. An average of 5 days is what we are currently experiencing.
My question is -- Is it an allowable use of Undeposited Funds to post the deposit on the day the check is received, or the bank deposit is requested while waiting for the deposit to be delivered to the bank and deposited to our account.
The delay causes a client's payment to appear to be late. Plus, it is difficult to manage the AR when it isn't up to date.
With more and more companies using offsite mailboxes or lockboxes, I am hoping using Undeposited Funds is a solution or there is another solution in use out there in the QB Community.
I do understand the how and why of Undeposited Funds. My question is about using Undeposited Funds for checks that are not in my possession yet (not in my desk drawer if you will) but are '"in transit" for up to a week.
Is there any reason I shouldn't use Undeposited Funds in this way?