You've showered and walked the dog. Now you're ready to tackle the issue of using the Undeposited Funds account in QuickBooks online. A comprehensive video dated August 2, 2024 is available on the Certum Solutions YouTube channel, but key points will be highlighted in this summary.

So, precisely what are undeposited funds? The name should help. Undeposited funds are funds received but not yet deposited such as checks, credit card payments or cash. While we may delay a bank trip, we don't want to delay recording the customer's payment in our ledger.

QuickBooks Undeposited Funds Account now comes into play avoiding an inflated bank balance and allowing these funds to be batched rather than having to decipher each individual deposit. Recording undeposited funds also helps avoid constructive receipt issues (funds received by you or your agent without restrictions), makes reconciliation easier as the funds are already batched and helps you more easily recognize float funds (funds which are not readily available). Nobody wants an inflated bank balance when paying bills or trying to create a cash flow forecast.

Always check when reconciling your books that these manual payments are showing as deposited when they are available. There can be a glitch. Remember paper checks have to be manually deposited and there is always the possibility of credit not being given where credit is due.

Referring to the above mentioned video, there is a comprehensive visual demonstration that may be much more helpful than a written summary, but we'll run through it.

We'll first go to the QuickBooks Dashboard and navigate to the Chart of Accounts. The filter/search bar enables us to quickly access the Undeposited Funds Account. For the purpose of the balance sheet, this account type is listed as an Other Current Assets account. This and other Assets accounts are listed in order of liquidity, so this account contains credits/assets that will be used quickly; before or within a year.

We previously mentioned the balance sheet.Your balance sheet is rather like a perpetual statement dependent upon the viewing date entered. From the menu bar, our balance sheet can be found by clicking Reports, then Balance Sheet Detail. Date dependent, a balance can be shown in the Undeposited Funds Account, but a zero balance showing in your ledger. Funds in the Undeposited Funds Account will not remain there for a very long period. If it does or continues to grow, you need to take back what is yours!

Let's enter a received payment and review depositing it to the Undeposited Funds Account. We click on the New tab in the menu bar, then click Receive Payment. Fill in the appropriate fields and ensure that it's to be deposited to Undeposited Funds. Depending upon the number of entries, after providing the appropriate information, we will hit either Save and Close or Save and New.

It's wise to again navigate from the reports menu to your transaction report and check that the payments were entered correctly by date, type, amount, etc., to the Undeposited Funds Account.

Okay! It's lunch time and we've got time to quickly run by the bank. We are going to navigate to the New tab on the menu bar, then Receive Payment, Other, then Bank Deposit. For convenience, from this tab you can also print your deposit slip. After we Save and Close, monies from Undeposited Funds Account should be cleared.

At the end of the month reconciliation, we will notice than any deposits made on that day will be batched. That means that rather than counting fingers and toes to ensure we have the correct number and dollar amount of deposits, the deposits and their amounts are in one magic number.

Should you desire a more in-depth explanation of using the Undeposited Funds Account, the YouTube video created by Katherine Bunschoten, CEO of Certum Solutions, is very informative and an excellent resource. Thanks for reading!