Undeposited Funds

I'll help with your question about using the Undeposited Funds account in QBO, Joe2021.

The Undeposited Funds account in QuickBooks Online serves a special function – it’s a special temporary account that QuickBooks uses to hold payments received from invoices before you deposit them into in the bank.  It's not an actual bank accounts which is why there's no option to reconcile it in QBO. 

Let me share these articles with you for more details:

• What’s the Undeposited Funds Account? 
• How to Use the Undeposited Funds Account to Receive Payments in QuickBooks Online 

I'd also like to give you these articles for additional guidance and reference about using the Undeposited Funds account in QBO:

• Learn About the Chart of Accounts in QuickBooks
• Record And Make Bank Deposits in QuickBooks Online

Please know that you can always reply or reach out to us again if you have other questions. We'll make sure that everything is sorted out.

I understand your explanation but I still think you are wrong. 

Based on the link you gave me, it seems like undeposited funds should be in cash.  I quote "It typically includes coins, currencies, funds on deposit with bank, cheques and money orders."  Since funds on deposit with bank is listed one should assume that meant all money already deposited meaning all the others types listed are not deposited.  Think about it this way.  If I was running a small business and I had a cash register I would have $200 in there to make change for customers plus all the cash customers paid me.  Maybe I go to the bank once a week or when I feel there's a good bit of cash.  That money certainly doesn't go in Other Current Assets because I can READILY change it into cash.  

The example they cited as Other Current Assets was a overpayment of taxes due to the company.  That means they are going to get the money at some point but it wasn't cash.  

Finally, if you look at the sample chart of accounts used by GAAP it says "Cash in bank and on hand".  If I have a check in my drawer and it's not in the bank I would say it's "on hand".

We can beat this up all day but if you look at how many posts there are about this account it would seem like Quickbooks has dropped the ball on this.  If the account was listed before the bank account it might make more sense to folks.  If nothing else, don't force the account on folks OR let them assign which GL account as to use as the pass through account.  

Hi there, Joe2021.

I appreciate all the details and feedback on how we handle the Undeposited Funds account. 

In QuickBooks, we follow and use the Undeposited Funds account to hold invoice payments and sales receipts. It’s a detailed type of account under Other Current Assets that are likely to be converted to cash. 

I'm willing to listen if you have other concerns about the features in QuickBooks Online. Just tag me in your comments below and I'll be there to help you out.

@Catherine_B You didn't even read the thread when you typed your answer so what is the point of tagging you.  I fully understand why you are using it and how you are using.  Now, go read the thread and respond to the points addressed.

I️ am trying to understand why when I️ send an invoice to a customer and they click the invoice to pay the invoice via their credit card - I️ receive a confirmation a payment has been made which is great, however the funds are not being posted to my bank account they instead go into Undeposited Funds.  I️ do see that undeposited funds are defined as a holding spot for funds that have not yet cleared.  So my QUESTION is what happens with those funds?  Do they get appropriately posted to the corresponding invoice# once their bank clears the credit card payment? Or am I️ supposed to do something with them?  

Thank you for your anticipated assistance

I also have the exact same question.  Is anyone able to assist with what MDR12 has described?  It has been two months since asked.  

I️ am trying to understand why when I️ send an invoice to a customer and they click the invoice to pay the invoice via their credit card - I️ receive a confirmation a payment has been made which is great, however the funds are not being posted to my bank account they instead go into Undeposited Funds.  I️ do see that undeposited funds are defined as a holding spot for funds that have not yet cleared.  So my QUESTION is what happens with those funds?  Do they get appropriately posted to the corresponding invoice# once their bank clears the credit card payment? Or am I️ supposed to do something with them?  

Hey there, @OTB2012.

Thanks for joining the thread. Allow me to share insights about Undeposited Funds (UF) in QuickBooks Online (QBO).

Yes, you're correct. The UF account holds customer payments in QuickBooks until you deposit them at your real-life bank. 

Your funds will still remain in this account not until you create a bank deposit in QuickBooks. The system won't automatically deposit it to the right account, thus you'll have to manually do it inside the program. 

All payments in the Undeposited Funds account automatically appear in the Bank Deposit window. Once you have your deposit slip in hand, you'll have to open this window to move the funds to the actual bank accounts. Let me show you how:

1. Click + New and select Bank Deposit.
2. From the Account ▼ drop-down list, choose the account you want to put the money into.
3. Select the checkbox for each transaction you want to combine.
4. Make sure the total of the selected transactions matches your deposit slip. Use your deposit slip as a reference.
5. Click Save and close or Save and new.

On the other hand, you can review your past bank deposits by running the Deposit Detail report. This report lists all your completed bank deposits in QuickBooks. Here's how to open the report:

1. Go to the Business overview then select Reports, or go to Reports.
2. Scroll down to the Sales and customers section.
3. Click the Deposit Detail report.

For additional info, you may check the following articles:

• How to put payments into the Undeposited Funds account before you combine them into a deposit
• Record and make bank deposits in QuickBooks Online

Should you need more help in moving money from the Undeposited Funds to the right account, don't hesitate to let me know. Have a good one.

I appreciate your article about Undeposited Funds.  I didn't realize that there is a preference under Company to unclick so payments do not going into the Undeposited Funds account.  I haven't been using the Payments function in QB Desktop Pro, and now I have all sorts of funds in my Undeposited Funds account, many of them are over a year old.  How to I get rid of them out of this account, without deleting deposits in my check register?  Thank you!

 Hi there, @Illinois_Farmer.

Do you have a current balance in your Undeposited Funds account? Did you deposit the funds in your register and included the payment in them? Are they linked together? If not, how did you record the deposits?

While waiting for response, I'm including these helpful resources about the topic:

• Deposit payments into the Undeposited Funds account 
• Record and make bank deposits

I'd appreciate any additional information you can provide. I'm here to ensure we can get this sorted out.