In this tutorial Linda Artesani explains the QuickBooks Online Undeposited Funds account, why it often causes bookkeeping problems, and how to resolve them. She likens the account to a desk drawer that holds received checks before they are deposited as a batch. Common issues arise when users connect bank feeds, record invoices and customer payments, but forget to create the corresponding bank deposits, leaving a large balance in Undeposited Funds. Linda shows how to spot red‑flag symptoms—such as a high Undeposited Funds balance and old, unmatched payments—by reviewing the Sales → Payments list and the Bank Feed screen. She walks through a concrete example: a $75 check dated June 8 2017 that is waiting to be matched. Using two open screens, she refreshes the bank feed, removes QuickBooks’ guessed payee name, and manually matches the payment to the deposit. She also notes that older transactions in closed fiscal periods require extra care. Throughout, she emphasizes patience, systematic matching, and reconciliation to ensure no duplicate entries remain. The video ends with an invitation to contact her via Facebook for further help.
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Hi there, Linda Artesani, Artesani Bookkeeping. I wanted to do another video on the undeposited fund account. It's an account that causes a lot of people trouble when they do their bookkeeping. One of the reasons that is, is because it's, it's an account made up by QuickBooks basically, and it's used as a holding place for payments so that you can group them for deposit, just like they went into the bank. I liken it to the desk drawer. If you were sending out invoices and people were paying you by a paper check, you would get your mail, put it in the desk drawer, maybe pick up checks on Monday, Tuesday, and Wednesday, and then on Friday you go to the bank. So you may have 6 or 7 checks that get deposited together, and on your bank statement it's going to show the total of the deposit. It's not going to show the individual payments going in. So you put these transactions— as you record the customer received payments, you're going to put them in To the payments going to get applied to undeposited funds. So I'm going to take you to a file and show you what that looks like. One of the first things I notice when I go to a customer's records, when I get records from a client, that they're having an issue, and the first red flag is if they don't pay attention to their books, they hook their banking up. That's one of the issues with QuickBooks Online is people hook their bank account up to the bank feed and they figure they're good to go, and then they go ahead and they just download Anything that's a sale to the income account, and then they record their invoices, they record their payments on their invoices, and then they don't make the deposits. So you see this large number here in undeposited funds. Now that's there because this client put all these payments into the bank. He recorded his— he recorded his invoices, and then he recorded his customer payments, and then what he did was— He didn't record the payments. He didn't— he put them into undeposited funds. So let me see if I can find one here that would show you a payment. So let's go to sales and go to a payment. Everything's fine. He created the invoice, he got paid, he put it in undeposited funds, but there's no place that says it was deposited. So that's the last step that he's missing. So if we come to the bank deposit screen, you'll see all these payments sitting in here, and if you sort them by date, you'll see that there's some really old payments sitting in here that were never deposited. This is an issue because it was a prior year, fiscal year, where he's probably already run a tax return on. And if I come here, I'm going to see that there's a bunch of transactions in the For Review column. By date, you'll see here that there's a whole bunch of things received, but they're ancient. They haven't been deposited. So this client didn't actually have deposits that were— he contacted me because he didn't have his income showing, which is a little unusual. Most people just in a big hurry, they see, oh, here's all the money I got, and they just willy-nilly put these into income. So that's an issue that people have with undeposited funds. Now, how do you fix this, as you're probably wondering? With a check. June 8th, he had a check for $75 that he received. So I'll go into here and look for June 8th and see if I can find one for $75. And here it is, $75 on June 8th. So, it's sitting waiting to be matched. So, if I come over here and go to June 8th where he had the payment of $75, right here, Steven Miles, I'm going to make sure the date says June 8th, 2017, and I'm going to put that one check in my deposit. Now, I'm going to go back to this Bank Feed screen, and because I have it on open, all these tabs open at the same time. You have to refresh the screen. There's no guarantee this is gonna match. It's just too long and it's been around for a while. So if I'm lucky, it'll match. I have a payment deposit on 6/8. If I want to make it see this, I'm gonna remove this person's name because she was not the person that got it. And then I'm gonna look for a match and see if it finds my match on 6/8 for $75. It might find it because of that, and it did. So that's the little trick to make sure it finds it, because QuickBooks, what it does is it now it's gonna change every, every payment to this client's name. But you have to make sure you remove it. So if you're trying to figure out why is the match not being seen when I clearly had a deposit on 6/8 of $75 and I clearly had a deposit waiting to be matched for $75, you have to make sure that you remove the name that QuickBooks guessed it was. And every time I enter one, it's going to put the name of the next client in. Yes, it's going to be a painful account for me to clean up, but at least it's there and I've got it going. It shouldn't take me that long. It's just a matter of having 2 screens open. It's a little difficult to navigate when I'm trying to show you here on one screen. But, um, that's how I work finding and cleaning up the undeposited fund account. Not an easy chore, but it's doable. Just have to take the time and have the patience and match them as you go along. And then I will go through and I will match them and make sure it's reconciled so there's nothing in there that's a double. I'll deal with the 2016 transactions that are hanging because that's on a closed fiscal period, so that's a whole different animal to work through. Thank you so much for watching. I hope this was a helpful tutorial, and if you have any questions or comments, please feel free to reach out to me on Facebook. It will be in the, the handwritten place on my website to find that, and I will post that in the bottom of this YouTube video. Thank you so much. Bye now. Thank you.
