If you do your own bookkeeping with QuickBooks, you may have noticed the pesky little Undeposited Funds account along the way. This account confuses people, but we promise it’s for a good purpose! If you’ve just happened to ignore this feature of QB, you’re doing yourself a disservice.
Your Undeposited Funds account will act as a middleman between your invoices and your bank deposits. When you receive payments from invoices, they’ll be held in this temporary Undeposited Funds account until they’re deposited into your bank account. When you receive a payment, you’ll simply choose Undeposited Funds from the “Deposit to” dropdown menu, this way you know which payments need to be deposited (it should already be the default option).
When using the Undeposited Funds account, you can enter single or group payments. However, it’s vital to remember that your QuickBooks account should match what’s happening in real life in your bank account. If your bank recorded group payments as one single deposit, then your books should match this. For single invoice payments, the Undeposited Funds account may not be necessary and you can easily skip this step without causing issues in your books. But, to ensure everything is right, it’s never a bad idea, even if it is a couple extra steps. Come time to reconcile your accounts, you’ll be thankful when everything matches up.
The Undeposited Funds folder isn’t as mysterious as it seems. It’s purpose is to streamline and make for a more efficient invoicing process. It keeps track of all the bits and pieces of the invoicing process for you. Next time you receive an invoice payment, don’t be afraid to deposit it into your Undeposited Funds account!