Are you familiar with undeposited funds in QuickBooks? It’s a native feature of the popular accounting software. With undeposited funds, you can essentially consolidate multiple customer payments before depositing that money into your bank account. For a better understanding of undeposited funds, keep reading.
What Are Undeposited Funds?
Undeposited funds are exactly what they sound like: funds that your business has received but hasn’t yet deposited into its bank account. When customers pay you for goods or services, QuickBooks may place those funds in a temporary account. Known as an undeposited funds account, it will consolidate the customers’ payments. You can then initiate a transfer to move the money from the undeposited funds account to your bank account.
What’s the Purpose of Undeposited Funds?
By using undeposited funds, you can make fewer bank deposits. It’s designed primarily to consolidate customer payments. For example, you may have 10 customers, each of whom pay you $100. Without undeposited funds, you would have to make 10 bank deposits. Undeposited funds, however, allows you to consolidate the payments. Rather than making 10 bank deposits of $100 each, you can make a single bank deposit of $1,000.
How to Enable Undeposited Funds
In QuickBooks Desktop, you can enable undeposited funds in just a few easy steps. Start by accessing the “Edit” menu and navigating to “Preferences.” You should see a “Payments” option on the list. Click the “Payments” option and choose the “Company Preferences” tab.
Next, click the “Use Undeposited Funds as a default deposit to account” box so that it has a checkmark in it. Verify the box has a checkmark, after which you can complete the process by selecting “Ok.” You can now choose the undeposited funds account when you create sales receipts.
What About QuickBooks Payments?
If you use QuickBooks Payments to facilitate business-related transactions, you won’t need to use undeposited funds. QuickBooks Payments will automatically handle customer payments and the necessary bank deposits. For invoice payments and sales receipts, though, you may want to use undeposited funds.
You can also check your undeposited funds account to determine which customer payments are being held in it. The undeposited funds account is available to view in your Chart of Accounts. Navigate to the “Lists” menu and select “Chart of Accounts.” You can then right-click the “Undeposited Funds” link and choose “QuickReport: Undeposited Funds.”
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