How to Fix Undeposited Funds In QuickBooks

Payment Processing Fees Comment 1

In my post on How to Record Payment Processing Fees I walked you through the process of recording those transactions. The Undeposited Funds account is affected as an incidental to this topic, because they payments you receive, where the processing fees are later deducted in the Make Deposits dialogue, clear through Undeposited Fnuds.

Julie recently wrote in on this post asking for help with Undeposited Funds, based on an issue that is apparently cropping up from trying to record similar transactions with payment processing fees involved.

The issue Julie is having is that she has a large negative balance in her undeposited funds account. I have no way of knowing for sure, how to troubleshoot this, without actually looking at Julie’s live data, but this video answer should give you some ideas about how to troubleshoot, and then fix undeposited funds.

Here are some other resources that will help you better understand how to work with the undeposited funds account in QuickBooks:

4 Replies to “How to Fix Undeposited Funds In QuickBooks”

    1. Thanks.

      You would need to re-post any invoices, and then receive the payments on them. You can’t simply post a balance into undeposited funds, because you need to know which customer it came from, and it has to be tied to an invoice.

  1. Seth, A Quickbooks Online client has an uncleared undeposited funds balance from a previous year from 3 customers. No invoices are available to receive payments and no payments are available to clear in bank deposits. The invoices have been cleared with a cc payment and reconciled in the bank. But they are the issue when I go through the UDFunds and locate the payments that are adding up to cause this erronous balance.
    I’ve been round and round with QBO, their suggestion is to delete the payment and re-receive it. Kinda concerned … can you suggest something?

    1. Hi Mary.

      If I understand correctly, you have amounts sitting in undeposited funds, that don’t seem to be tied to any invoice.
      What this likely means is that payments were recorded, and either never applied to an invoice, or the invoices were unapplied and then the CC payments applied, without actually removing the original payments.
      So step 1 is to fund these payments. Do a search for the amount, note the date. You will likely find two payments that represent the same one. Figure out which is the one sitting in undeposited funds.
      Now you can figure out what you want to do with it (ie) void it, or since these are from prior years, what you may want to do is record a deposit in the current year, to get these out of UDF. Then zero out the deposit with an offset to either income (since they technically represent duplication of income). Or you can offset these to an “Other Income / Expense” account called, “Prior Period Adjustments.” I prefer the latter method, because this keeps it at the bottom of your P&L, and out of the operating profits for the current period.

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