Resolving Negative Accounts Receivable

Welcome to the Community, @Shari.

Let me help and provide insight for you to clear the negative accounts receivable balance and the undeposited funds in QuickBooks Online (QBO).

To start, If you have a negative balance in your Accounts Receivable (AR), you can fix it by creating a Journal Entry. To do this, you have to debit the AR account and credit the Sales Income or any other income account. However, if you want to resolve the issue directly in a customer's AR balance, the customer has to use credits to pay off the invoice via receive payments.

Additionally, If you see a link attached to your invoice, make sure to check for any credit transactions that can be applied to the invoice. I also suggest consulting your accountant for more accurate information.

To clear the Undeposited Funds, you'll have to edit the Deposit to account for the recorded payment. Here's how:

1. On the left panel, click Sales and select Customers.
2. Click the customer's name and look for the payment.
3. In the Receive Payment page, change the account from the Deposit to drop-down list to any bank account.
4. Click Save and close.

However, If you follow the recording process of your bank, to clear the UF accounts you'll have to add a bank deposit to deposit the payments received into your bank.

For future reference, you can check this article to guide you in running reports: Run reports in QuickBooks Online.

Please feel free to drop a comment below, if you have further concerns about the clearing UF and negative accounts receivable or other QBO-related concerns. I will answer them in any possible way.

@ShariWhite 

Do the A/R and undeposited funds (UF) amounts offset?  To create a transaction that offsets A/R with UF, you can use an expense transaction (New > Expense).  Choose the customer under 'Payee', UF under 'Payment account', and A/R under Category.  Then, apply the A/R credit to the A/R debit created by the expense transaction by going to Receive payment.  Then, make a bank deposit and select the offsetting UF amounts that net to zero to clear them.  You should be all set.   

Wait do you mean the client would have to pay out of pocket real money & physically make a deposit?

Sorry I was having a blonde moment! lol Must be time for a break!