I have reconciled but there is still a balance in undeposited funds. Why is this happening?

Hello, @AlarmCompany.

Transactions from the Undeposited Funds account should be recorded as a Bank Deposit to clear it out.

The Undeposited Funds account serves as a holding account before you create a bank deposit. To clear the balance, you must create or record this as a Bank Deposit. 

Here’s how:

1. Click the + New button and select Bank Deposits. 
2. Select the box on each transaction that you'd like to include in this bank deposit. 
3. Choose the bank account where you'd like to deposit this payment under the Account drop-down. 
4. Enter all the necessary information.
5. Click Save and close once you're done. 

Check this article for more information: Record and make Bank Deposits in QuickBooks Online.

Just make sure that no payments are left under your Bank Deposit page to clear the balance of your Undeposited Funds account. Here’s an article to know more about this: Deposit payments into the Undeposited Funds account in QuickBooks Online.

The Community is always here to assist you with your bank transactions. Take care and have a wonderful day!