QuickBooks Undeposited Funds Process - Follow the Money
Posted by Mariann Goff on Mon, Apr 05, 2010
One of the most misused and misunderstood accounts in QuickBooks is the Undeposited Funds account. Undeposited Funds is a repository for payments received but not yet deposited in the bank.
Think of it as the deposit bag you put your cash and checks in to take to the bank. You know they are going to the bank, but they haven't hit your bank account just yet. Often new clients tell me they didn't even know that they had an Undeposited Funds account and so, they ask, "How did the money get there?"
When customer payments are received using either a Sales Receipt or the Customer Payment screen QuickBooks provides the option of selecting where to deposit the funds. The default is set to Undeposited Funds.
Sound complicated? It really is quite simple once you get into the habit of following the 3 step process for receiving and depositing funds in QuickBooks.
- Receiving a customer payment is the first of a 3 step process.
- Clear the balance from Undeposited Funds by selecting Make Deposit option under the Banking menu.
- Select the payments included in a particular deposit at the Payments to Deposit window. The payments selected should equal the deposit being made at the bank.