How to Clear Undeposited Funds and Fix Deposits in QuickBooks Desktop

Before you start

• Have the bank statement or deposit slips ready. Record one deposit in QuickBooks for each deposit slip.
• Undeposited Funds holds customer payments until you deposit them. Only payments in it appear in Payments to Deposit.
• If you use QuickBooks Payments, QuickBooks creates those deposits for you. This guide covers payments you deposit yourself.
• Check whether the deposit you're fixing is already reconciled. Intuit lists edited or deleted reconciled transactions as a cause of reconciliation differences.

Step 1: Find what's sitting in Undeposited Funds

1. 1Go to Lists > Chart of Accounts.
2. 2Right-click Undeposited Funds and select QuickReport: Undeposited Funds.
3. 3Set Dates to All.
4. 4Select Customize Report and open the Filters tab.
5. 5Choose Cleared in the filter list, select No, then select OK.

The report lists the payments still in Undeposited Funds. Compare it with your bank statement. Some will need a deposit (Step 2). Others may match a deposit typed in by hand (Step 3).

Step 2: Deposit payments that are still waiting

1. 1On the Home page, select Record Deposits / Make Deposits.
2. 2In Payments to Deposit, select the payments that make up one bank deposit, then OK.
3. 3In Make Deposits, choose the bank account in Deposit to.
4. 4Enter the date you made the deposit at the bank, and check the total against the deposit slip.
5. 5Select Save & Close. Repeat for each deposit slip.

Step 3: Link a deposit that was entered without its payments

This happens when someone types the bank deposit straight into Make Deposits while the customer payments sit in Undeposited Funds. Intuit's fix swaps the typed line for the real payments. Intuit says the reconciliation stays intact.

1. 1Go to Banking > Use Register, choose the bank account, and find the deposit.
2. 2Double-click the DEP line to open the deposit.
3. 3Select the line that was typed in by hand and press Ctrl+Delete.
4. 4Select Payments at the top of the window.
5. 5Check the payments that belong to this deposit.
6. 6Confirm the total still matches the bank, then select Save & Close.

Step 4: Fix a payment deposited straight to the bank

Here the money was deposited without going through Receive Payments, so the invoice is still open. Intuit says to check with your accountant first, especially if the deposit is in a closed period.

1. 1Open the deposit.
2. 2In Received From, enter the customer named on the invoice. Select OK on the warning about outstanding invoices.
3. 3In From Account, replace the account on that line with the Accounts Receivable account the invoice uses.
4. 4Select Save & Close. The deposit now creates a credit for the customer.
5. 5Go to Customers > Receive Payments and choose the customer.
6. 6Select the invoice, then Discounts and Credits. Check the credit, select Done, then Save & Close.

Step 5: Edit or delete a deposit

1. 1Go to Reports > Report Center, open the Banking section, and run Deposit Detail.
2. 2Find the deposit and open it. The Make Deposits window lists every payment on it.
3. 3To take one payment off, select its line and press Ctrl+Delete, or choose Edit > Delete Line. Then save.
4. 4To start over, right-click in the window, select Delete deposit, then OK.
5. 5Rebuild the deposit with Step 2.

Deleting a deposit sends every payment on it back to Undeposited Funds. If the deposit was reconciled, expect a difference at your next reconciliation. See how to reconcile a bank account for fixing that.

Edge cases

• Payment recorded for the wrong customer, already deposited and reconciled: record a duplicate payment for the right customer. Open the original deposit from Banking > Make Deposits (select Cancel on Payments to Deposit, then Previous until you reach it). Add the new payment with Payments, remove the original line with Edit > Delete Line, and save. Then delete the original payment in Receive Payments with Edit > Delete Payment.
• One deposit split across two bank accounts: in Make Deposits, add a line, choose the second account in From Account, and enter its share as a negative amount.
• Part of a deposit going to a non-bank account: use the Cash back goes to field and enter the amount.
• A payment your bank records as its own deposit doesn't need Undeposited Funds. It can go straight to the bank account.
• Choosing the account each time: clear Use Undeposited Funds as a default deposit to account at Edit > Preferences > Payments > Company Preferences. You then pick the Deposit to account on each sales receipt.

Where QuickBooks Desktop leaves the work to you

• Someone has to group payments the way the bank grouped them, deposit by deposit.
• Payments stay in Undeposited Funds until someone deposits them. Intuit suggests checking the account from time to time.
• A deposit typed straight into Make Deposits isn't linked to the payments. Someone has to spot it and link them.
• Fixes to reconciled deposits need care, and often your accountant.

How Logistify helps

Logistify doesn't record or fix bank deposits. The Accounts Receivable Service matches customer payments in the bank file to the open invoices they pay and records them in QuickBooks Desktop as Receive Payments. Unclear payments, short payments and overpayments wait for your team.

For the payment step itself, see how to receive payments and apply them to invoices. We explain the matching approach in AI cash application for QuickBooks Desktop Enterprise.