Undeposited Funds 101
Novi AMS associations will notice Undeposited Funds when receiving payments.
Undeposited Funds is simply a holding account that tracks payments received from customers that have not been deposited to your bank account.
Thinking in literal terms, this is your "desk." It's where checks live once they have been applied as payments, but before they have been deposited. In a perfect world, transactions would only live in this account for a few minutes while they're sitting on your desk.
The most important reason for using Undeposited Funds when receiving payments and making deposits is to ensure that your bank statements will match your QuickBooks bank account ledger. If you receive two payments, a check for $50 and another for $100, and deposit those checks, your bank will report a deposit of $150. If you didn't use Undeposited Funds, your ledger will show the individual checks, and reconciling your bank account could quickly become a nightmare.
Receiving Payments and Making Deposits
In the video above, we used a QuickBooks Online sandbox account to recreate common transactions that would use undeposited funds. In this guide, we will walk you through the steps and purpose behind undeposited funds.
1. Receive Payment
First, find your customer with an open invoice in QuickBooks. Under the Action tab, click "Receive Payment." Notice that when you go to receive the payment, QuickBooks will automatically deposit this to undeposited funds, shown below.
Be sure to Save & Close.
Next, we repeated the process for Bill's Windsurf Shop to show how undeposited funds works with multiple payments.
Want to check your work?
You can double check your work by going to Transactions > Chart of Accounts. Search for Undeposited Funds. Under the Balance tab, you will see a balance that should match the amount of the payments you just received. If you click "View register" you will see the specific payments included in the balance, shown in the screenshot below.
2. Deposit Into Your Bank Account
Now that you've received payments and checked your work, your next step is to deposit the checks that are sitting on your desk.
In the top right corner of the screen, click on the plus sign icon and choose "Bank Deposit" under the "Other" category.
You should see your undeposited funds payments at the top of the screen under "Select Existing Payments." Select the payments you would like to deposit and which checking account you want them deposited into, as shown in the screenshot below.
At the bottom of the screen, you will see a section titled "Add New Deposits." This is a place for nontraditional checks that come in from outside places and are not necessarily payments received from customers.
For example, If you want to add in a reimbursement check or a check from a utility company, this is the place to do it. You can go in to this section (shown in the screenshot below), type in the name of the check sender and choose to add them as a customer, vendor, or employee. Then, choose the account the money came in from and the amount of the check.
Want to Check Your Work?
View the Undeposited Funds Register
Once you Save & Close out of the Deposit screen, you will be back in the undeposited funds register that is now at $0. This register acts as a holding account, so your goal is to be at $0. If you have QuickBooks Payments, it will also use this account. You may see credit charges coming through from Payments, so the amount may not always be $0, but that is the goal.
View the Bank Register
Finally, go to Transactions > Banking to see your bank register for your checking account. On the right-hand side, click "Go To Register." Here you will see the total amount of the deposit, shown in the screenshot below.
Understanding this final portion is very important because your bank statement will show you this total amount of the deposit, as opposed to the varying amount of the different checks.
Perhaps this data map can help.
Information for Novi AMS customers.