How To Deposit And Clean Up Undeposited Funds In Quickbooks?

You might get confused due to the Undeposited Funds Account in the balance sheet. It is beneficial for every type of business. Undeposited funds in QuickBooks accounts are temporary accounts. The account’s primary purpose is to make the reconciliation process much more manageable. It enables you to combine multiple transactions in one single record. The statement will be similar to your banking transactions.

The Undeposited Funds In QuickBooks benefits businesses that get cash or checks more frequently. Deposit the money to your bank account using the mobile check deposits feature. In this blog, you will know everything about QuickBooks Undeposited Funds.

Table of Contents

What Are Undeposited Funds In QuickBooks?

QuickBooks Online and Desktop accounting software have a critical feature called QuickBooks Undeposited Funds. It holds the payments from your customers until it gets deposited into the existing bank account. You will get all Undeposited Funds in QuickBooks into the same account. QuickBooks also allows you to combine all these transactions and payments in a single record. As a result, you can match it easily with banking transactions.

The Undeposited Funds in QuickBooks works like a drawer or lockbox. It keeps the payments before taking them to banks. The process ensures that your QuickBooks transactions match the banking records. It also makes the banking reconciliations process much more manageable. Here is how it works:

Firstly, you must send Invoices to customers and record all your sales receipts.
After that, Receive payments from customers
Then, Deposit it to the Undeposited Funds account
Finally, make the Bank Deposit.

You can use this feature using the latest QuickBooks Online or Desktop accounting software version.

How To Report Undeposited Funds In QuickBooks?

Before you learn how to deposit payments into Undeposited Funds in QB, it’s essential to know about generating a report. As mentioned, Undeposited Funds are basically payments that are yet to be deposited into your bank account. So, you can generate reports to check the total amount of your Undeposited Funds.

Here are the steps to create a report of your total Undeposited Funds:

Firstly, open your “QuickBooks Online” or “Desktop” account.
Then, navigate to the “Bookkeeping” or “Accounting” tab.
After that, select the “Chart Of Accounts” option from the window.
Next, locate the “Action” column of the “Undeposited Funds” account.
Now, click the “Drop-down Arrow” icon and select the “Customize” option.
Choose the date range or time from the menu.
You can choose the date ranges for a maximum of 90 days.
Finally, tap the “Run Report” tab.

So, now you’ve successfully created a report of your entire Undeposited Funds. Next, let’s understand the process of depositing payments into Undeposited funds in QuickBooks Desktop and Online.

How To Deposit Payments Into Undeposited Funds In QuickBooks Desktop?

The Undeposited Funds account holds your payments in QB until you finally decide to deposit them in your bank account. After you receive your deposit slip, you can combine all the payments into one record. This makes it easier for QuickBooks to match your bank records.

So, before you decide to combine your payments, follow these steps to deposit funds in QuickBooks Desktop:

Putting Your Payments Into The Undeposited Funds Account

Now, you should know a few things about putting payments in this account.

Firstly, you don’t have to combine or move payments to an account if you’re processing invoice payments via QB Payments for Desktop. In such cases, QuickBooks can handle everything itself.

Also, suppose you decide to process invoice payments outside of QB or follow the workflow in order to get paid for an invoice. In that case, QB can automatically put the payments into Undeposited funds.

Furthermore, QuickBooks has a default feature of putting sales receipt payments into Undeposited funds. Your only job is to create a sales receipt, and QuickBooks will handle everything else.

So, understanding this, follow the below steps to deposit payments into Undeposited Funds in QuickBooks Desktop:

Firstly, you need to connect your existing QuickBooks account.
After that, click on the “Edit” icon and choose your “Preferences.”
Then, navigate to the “Payments” tab and choose the “Company Preferences” option.
Select the “Payment” methods for your customer and uncheck “Use Undeposited Funds as a default deposit to account.”
Apply the changes to the existing customers and hit “OK.”
Afterward, go to the Homepage menu and click the Create Sales Receipt option.
Then, choose your customer from the “Customer” drop-down and tap the Undeposited Funds option from the “Deposit to” drop-down.

Finally, fill out the required details and tap Save & Close.

How To Deposit Payments Into Undeposited Funds In QuickBooks Online?

Just like in QB Desktop, QuickBooks Online also has the Undeposited Funds feature that helps keep payment records until you decide to deposit them in your bank account. As you may know, banks usually combine these deposit payments into a single transaction. So, you simply need the deposit slip containing the details about the payments combined by your bank. Once you have that, you can perform the same in your QuickBooks Online account.

Combining these payments into a single record can help your QB online account to match your bank record. So, for the below steps, deposit payments into Undeposited Funds in QuickBooks Online.

Putting Your Payments Into Undeposited Funds

Everyone can only have one QB Undeposited Funds account. You can use this account to hold your payments which you can group and combine together. After that, you’ll need to select the account in your Quickbooks in which you want to put the deposit when combined.

Transactions You Download From The Credit Cards And Banks

Your QuickBooks account can take care of the payments processed with QB Payments. So, there is no need for you to put the payments in Undeposited Funds.

Or, you can follow the below steps if you require to combine your payments processed outside of QB Payments:

Firstly, select “+ New.”
Then, from the “Customer” drop-down, select your customer.
Next, you must click on the “checkbox” for the invoice for which you are getting payments.
Afterward, head to the “Deposit to” drop-down and select “Undeposited Funds.”
Moreover, ensure to fill out the entire form.
Finally, hit the “Save and close” button.

How To Move Money From Undeposited Funds In QuickBooks?

After learning how to deposit payments into Undeposited Funds in QuickBooks, let’s understand how to move or transfer Undeposited Funds in QuickBooks. The simplest way to do this is by making a deposit. You can use the “New” option to add the deposit. Furthermore, you can also make a direct transfer of your funds.

So, basically, there are two options by which you can move undeposited funds to a bank in QB.

Option 1: Transferring By Making A Deposit

Start by navigating to the QB window to transfer the undeposited funds by making a deposit.

Firstly, you must go to the “QuickBooks” homepage.
Then, select the “New” option. This option is available on the upper left of the QB menu.
Next, just below the “Other” option, tap “Bank Deposit.”
After that, in the “Account” drop-down, select your bank.
Now, from the “Select the payments included in this deposit” section, tap the checkboxes for the transaction you’ll be depositing.
Finally, to activate these changes, hit the “Save and Close” button.

Option 2: Make A Direct Transfer

Follow these steps to transfer money from Undeposited Funds in QuickBooks using the “make a direct transfer” method.

Firstly, navigate to the “QuickBooks” homepage.
Then, from the top menu, select the “New” option.
Next, just below the “Other” option, select “Transfer.”
After that, from the “Transfer Funds From” drop-down, select “Undeposited Funds.”
Moreover, select the bank to which you want to move the Undeposited Funds.
Also, enter all the details carefully. Ensure to cross-check the information after you finish entering it.
Finally, hit the “Save and Close” button.

And with that, you’ve successfully transferred your Undeposited funds to your bank. You can repeat the same method to transfer funds again in the future.

How To Fix Undeposited Funds In QuickBooks Online?

Do you want to delete or clear the undeposited funds from your bank account? Well, in order to do this, you’ll have to make changes to the “Deposit to” account of the recorder payment. By doing this, you can remove the transaction that appears in the bank deposit section.

Follow the below steps to fix Undeposited Funds in QuickBooks online:

Firstly, tap “Sales” on the left panel and choose “Customers.”
Then, tap the customer’s name and find the payment.
Next, when you’re on the “Receive Payment” page, select a bank account using the “Deposit to” drop-down.
Finally, hit the “Save and close” button.

Now this is how you fix Undeposited Funds in QB Online. If you visit the “Bank Deposit” page again, you’ll no longer see the payment.

How To Deposit Payments Into Undeposited Funds In QuickBooks Online?

Combining these payments into a single record can help your QB online account to match your bank record. So, for the below steps, deposit payments into Undeposited Funds in QuickBooks Online.

Putting Your Payments Into Undeposited Funds

Transactions You Download From The Credit Cards And Banks

Your QuickBooks account can take care of the payments processed with QB Payments. So, there is no need for you to put the payments in Undeposited Funds.

Or, you can follow the below steps if you require to combine your payments processed outside of QB Payments:

Firstly, select “+ New.”
Then, from the “Customer” drop-down, select your customer.
Next, you must click on the “checkbox” for the invoice for which you are getting payments.
Afterward, head to the “Deposit to” drop-down and select “Undeposited Funds.”
Moreover, ensure to fill out the entire form.
Finally, hit the “Save and close” button.

How To Move Money From Undeposited Funds In QuickBooks?

So, basically, there are two options by which you can move undeposited funds to a bank in QB.

Option 1: Transferring By Making A Deposit

Start by navigating to the QB window to transfer the undeposited funds by making a deposit.

Firstly, you must go to the “QuickBooks” homepage.
Then, select the “New” option. This option is available on the upper left of the QB menu.
Next, just below the “Other” option, tap “Bank Deposit.”
After that, in the “Account” drop-down, select your bank.
Now, from the “Select the payments included in this deposit” section, tap the checkboxes for the transaction you’ll be depositing.
Finally, to activate these changes, hit the “Save and Close” button.

Option 2: Make A Direct Transfer

Follow these steps to transfer money from Undeposited Funds in QuickBooks using the “make a direct transfer” method.

Firstly, navigate to the “QuickBooks” homepage.
Then, from the top menu, select the “New” option.
Next, just below the “Other” option, select “Transfer.”
After that, from the “Transfer Funds From” drop-down, select “Undeposited Funds.”
Moreover, select the bank to which you want to move the Undeposited Funds.
Also, enter all the details carefully. Ensure to cross-check the information after you finish entering it.
Finally, hit the “Save and Close” button.

And with that, you’ve successfully transferred your Undeposited funds to your bank. You can repeat the same method to transfer funds again in the future.

How To Fix Undeposited Funds In QuickBooks Online?

Follow the below steps to fix Undeposited Funds in QuickBooks online:

Firstly, tap “Sales” on the left panel and choose “Customers.”
Then, tap the customer’s name and find the payment.
Next, when you’re on the “Receive Payment” page, select a bank account using the “Deposit to” drop-down.
Finally, hit the “Save and close” button.

Now this is how you fix Undeposited Funds in QB Online. If you visit the “Bank Deposit” page again, you’ll no longer see the payment.

How To Clear Undeposited Funds In QuickBooks Online?

There are two methods through which you can clear Undeposited Funds in QB Online:

Method 1: Remove And Record Process
Method 2: Dummy Bank Account Process

Let’s understand these methods and how they work in more detail.

Method 1: Remove And Record Process

Now, as mentioned, the first method we have to clear Undeposited funds in QB Online is the “Remove and Record process.” This method mainly includes retracing your steps, fixing the errors, and properly performing the workflow order.

So, follow the steps below to clear up the Undeposited Funds in QuickBooks Online using the remove and record method.

Firstly, open your QB account.
Then, head to the “Banking” tab.
Next, from the drop-down, tap on the “Option Bank Account.”
After that, tap “Undo” in “Uncategorized money-in transactions.”
Now, head to the “Bank Deposit” section.
Also, select the Bank account.
Next, enter the “Payment Date” and select “Removed Payment.”
Finally, hit the Save & Close” button.

Method 2: Dummy Bank Account Process

Now, for this method, you’ll have to make a dummy bank account to remove the Undeposited Funds of QuickBooks. Follow the below steps to clean up Undeposited Funds in QB using the Dummy Bank Account method.

Firstly, open your QB account.
Then, head to the “Settings” tab.
Next, tap the “Chart of Accounts.”
After that, click on “Create New.”
Moreover, name the new account “Dummy Bank Account.”
Now, fill in all the essential fields and hit “Save.”
Then, head to the QuickBooks home page and look for Bank Deposits.
Next, tap on your Dummy Account.
After that, select all the payments you want to clear from the Undeposited Funds account. Then, save your changes.
Now, tap on the “Expense” option.
Again, hit the same option, i.e., Dummy Bank Account.
Then, you must select your active account that receives income and earnings.
Next, hit the “Save” button and close the screen.
Finally, head to the Dummy Bank Account page and confirm whether the balance is zero.

How To Clear Undeposited Funds In QuickBooks Desktop?

So, after learning about clearing Undeposited Funds in QB Online, let’s explore how you can do the same thing in QuickBooks Desktop.

Follow the below steps to clear Undeposited Funds in QB Desktop:

Firstly, open your QB Desktop account.
Then, head to the “Banking” section.
Next, from the drop-down, tap on “Make Deposits.”
After that, look for the payment you want to delete from the Undeposited Funds account.
Moreover, select the payment and hit “OK.”
A “Deposit” Window will now appear on the screen. Select the option for “Deposit.”
Now, select your preferred bank account.
Next, enter all the essential details such as deposit date, etc.
Finally, save your Deposit. Then, press “OK.”

With this, you’ve cleared the amount from your undeposited fund account.

Review The Undeposited Funds In QuickBooks Account

You must check the Undeposited Funds account periodically to clear out all payments. Here are the steps to review your undeposited fund account:

Firstly, click the “List” option from the dashboard.
Select the “Chart Of Accounts” option from the window.
After that, right-tap on the “Undeposited Funds” option.
Select the “QuickReport” option from the drop-down window.
Then, choose the “Undeposited Funds” option from the menu.
Choose the “All” tab and click the “Customize Report” tab.

Afterward, go to the “Filters” tab and scroll down to the list.
Locate and select the “Cleared” option.
Scroll down and choose “No” from the window.
Finally, tap “OK” to save the changes.

Conclusion

Undeposited Funds In QuickBooks make bank reconciliation easier. You can use this temporary account to hold your payments and submit them to your bank account. We hope the above was able to help you report your Undeposited Funds and deposit them in QuickBooks Online or Desktop accounting software.

You can contact our ProAdvisors to resolve any QuickBooks or other accounting software issues. MWJ Consultancy offers professional software support services for Intuit softwares like QuickBooks and Turbotax and other accounting and taxing softwares to help you grow your business rapidly. You can call us at +1 877 469 0298 or email us at info@mwjconsultancy.com.

Frequently Asked Questions

What Are Undeposited Funds In QuickBooks?

Undeposited funds are the funds in your QuickBooks account that are not yet transferred to your bank account. You can schedule automatic payments or one-time instant deposits for your account.

How To Clear Undeposited Funds In QuickBooks Online?