Undeposited Funds and Statement of Cash Flow

Hello,

Undeposited Funds is still an asset to your company so it represents real money you've collected, you just haven't deposited it in the bank yet. (Think the blue bag of 50's and checks you keep under your register drawer or the safe you keep in the back office to hold money before you do weekly bank drops)

I always recommend setting up QuickBooks to mimic as close as possible to whats happening in real life.  If in real life Shopify deposits the money into your bank account then I would recommend adjusting your Shopify QBO sync settings so it deposits the money into the bank account on the sales receipt instead of Undeposited Funds.

I think I understand now. So when I think about tieing together the Statement of Cash Flow and the Balance Sheet, I start with the "Cash" accounts at end of period_0, add net cash flow for period_1 and arrive at ending cash for period_1. This should be equal to the sum of "cash" accounts on my balance sheet.

I think where I went wrong was thinking the "Cash" accounts were just the Banking Accounts, but it's actually Banking + Undeposited Funds + Petty Cash + etc.

You start with total Cash at the beginning of the reporting period.

Then, changes in other balance sheet accounts that used or provided funds, such as: a Loan Balance went down when you used Cash to make that payment; your AR went Down = you got Paid, so that increased funds. The Destination or Repository of those funds is any "stash of funds" you manage, including UF, if that is Not at 0. Or, you took a new loan = money got deposited in the bank. Or, you bought Inventory, so cash went down but Assets Total didn't change.

= ending Cash (cash and cash equivalents, really) at the end of the reporting period.

Thanks for the help, my problem is that I was thinking about UF as a balance sheet account where changes in it would make an adjustment to "cash" (which i was thinking about as just the bank accounts). All squared now. Thanks!

I agree with you in your explanation of what Undeposited Funds is and that it is not hitting income, expense nor cash but that does not mean it should not be accounted for on the Cash Flow Statement.  The reason is because the Cash Flow Statement is going to use the change in AR, amongst other balance changes, to offset Net Income to arrive at Cash Provided by or Used in Operating Activities.  The entry booked when a check is received but not deposited would be:

Dr. Undeposited Funds

   Cr. AR

If the change in AR, in this entry along with other payment methods, is going to be used to offset Net Income, then the change in Undeposited Funds must also be used.  Otherwise it will appear as if the reduction of AR was due to receipt of Cash when, in fact, you merely received a paper check. 

What if the bank you thought you where using is not the bank at all how do i  find the bank that is linked to quickbooks. With all my money

Good morning, @Michaelnow63! Glad to see you in the Community and thank you for your post. :)

If you're wondering which account you have connected to your bank feed, the best place to find this is in the Banking tab. QuickBooks Online does not keep account information but you can edit your sign in to see which bank you're connected to. 

1. Go to the Banking page and click on the dropdown to choose the bank in question.
2. Click the pencil icon and select the Edit sign-in info button.
3. Enter your bank website's login credentials. 
4. From there, you can review the details of the bank account.

That should give you the information you need. If you have any more questions, please feel free to reply to this post. We're all happy to help you!

All that being said above, 

When I match transactions.. will that change my categorization or do I need to categorize before matching transactions... or for that matter... do I need to deposit the batch deposit (auto downloaded on the bank feed) instead of matching from the bank feed? The reason, Im asking is because I when I go to the Undeposited Funds Register it will show  the account and a split with the bank account and others with accounts receivable. 

Then When I go to The PNL the Sales are much lower than the deposits being made and I know that the deposits other than a few refunds due to me are basically sales.  

I'm here to share a few information about categorizing transactions, Oluther2.

QuickBooks automatically downloads the latest transactions. Then, it looks for and tries to match them with what you've already entered into QuickBooks. If it doesn't find a match, it creates a new transaction record for you and you'll have to categorize them. You'll want to make sure to record and make bank deposits so you'll be able to track all the transactions and ensure the correct reporting. Normally, you'll have to enter deposits first before matching transactions. I've included this article for more information and detailed steps: Categorize and match online bank transactions in QuickBooks Online.

Apart from this, QuickBooks Online has dozens of reports that you can use to check if the same amount and figure are showing against your Profit and Loss report. You can customize your report to make sure you get the information you need. Visit this article for additional information: Customize reports in QuickBooks Online.

Reply to a comment below if you have any other queries about categorizing and matching bank transactions. The Community is always here for you all the time. Keep safe!

I was paid by the customer on the 23rd. The money still shows not deposited into my bank account. 

Hi there, LH32.

Thank you for posting here in QuickBooks Community. I'll provide information about the funding time and how deposit acts in QuickBooks Online.

If you're using QuickBooks Payments, you can check in your account if the money paid from the customer is already deposited from there. This way, you can check the status of all your processed payments and, when we put them in your bank account and the totals. Then, the Merchant Service Center shows the deposit status Pending if the bank didn't clear the deposit yet. However, when Intuit receives information from your bank that the deposited funds have cleared, the status changes to Funded. 

Here's how:

1. Sign in to the Merchant Service Center.
2. From the homepage, select Activities & Reports and then Deposits.
3. Select the date range in the Dates field.
4. Select Search.

Once verified that the amount is already deposited, you can record or make a deposit in QuickBooks Online. This is to make sure that the said payment hits your bank account. You can open this article to see further details and how to perform the steps: Record and make bank deposits in QuickBooks Online.

However, if the payments are still not yet deposited from the merchant and the customer pay online via credit card, the estimated time for payments to deposit is 5-7 banking days. While ACH payments will take a bit longer during your first month. You'll get your payments within 5 days for the first 1 to 4 weeks. For additional information, you can click this article: Find out when QuickBooks Payments deposits customer payments.

If the payment is still not deposited within the given length of time, I'd suggest contacting our Merchants Services Support Team. This team is the best resource for such inquiries, as they're able to request account information. They can also verify the status of the payment too and investigate why it wasn't deposited into your account yet.

Please also refer to this article to see how QuickBooks Payments deposits work in QuickBooks Online: Common questions about payments deposits in QuickBooks Online.

Don't hesitate to post again here in QuickBooks Community if you have additional questions. I'll be right here to help. Have a great day!