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Clearing a stuck Undeposited Funds balance

Undeposited Funds keeps a growing balance even though the money is already in the bank. When you reconcile, the bank shows one deposit but QuickBooks shows several smaller ones — or the other way around.

Payments go to Undeposited Funds from + Create, then Receive payment or Sales receipt, using the Deposit to dropdown. To group them, use + Create, then Bank deposit. You can also find the account under All apps, then Accounting, then Chart of accounts — look at the Detail type Undeposited Funds if the name was changed.

Likely causes

• Customer payments were received to Undeposited Funds, but a Bank deposit was never recorded to move them into the checking account.
• Each payment was recorded directly to the bank, while the real-world deposit was a single combined total, so the feed will not match.
• The downloaded bank deposit was categorized as income or a sales receipt instead of being matched to the Bank deposit you already entered.
• QuickBooks Payments already deposited the money for you, and a second deposit was recorded by hand.

Quick fixes

1. Open the Chart of accounts and open Undeposited Funds (or Payments to deposit, if it was renamed). Confirm which payments are still sitting there and compare them with deposit slips or the bank statement.
2. For payments you took to the bank together, go to + Create, then Bank deposit. Choose the bank account and date of the real deposit, tick only the payments that belong on that slip, and confirm the total matches the bank. Save and close. Record one QuickBooks deposit for each real deposit.
3. If a bank fee was taken out of the same deposit, add it as a negative line in the Add funds to this deposit section rather than editing the original customer payments.
4. On the Bank transactions screen, match the downloaded deposit to the Bank deposit you just recorded. Do not add it as new income.
5. If you use QuickBooks Payments, leave those invoice payments alone — Intuit deposits and records them for you. Use Undeposited Funds for checks, cash, or other payments you combine yourself.

A few more questions

Do I have to use Undeposited Funds for every payment?

No. Use it when the bank records several payments as one deposit. If a payment hits the bank by itself, you can deposit it straight to the bank account. QuickBooks Payments also skips this step.

Why don't I see a payment in the Bank deposit window?

Only amounts still in Undeposited Funds appear there. If the payment was deposited straight to checking, or already included in another deposit, it will not be on the list.