1. I am attempting to enter a remittance of $0 in “Received Payments”. The customer applies outstanding credit memos to the invoices being paid, so the net amount was $0. I need to enter these in to match up the invoices and credit memos that the Remittance includes. When I try to do so, I get a message saying “You cannot apply an amount greater than the total payment plus any existing credits.”
    I have highlighted the invoice, went to “Discounts and Credits”, entered the correct discounts and credits, so that the payment equals $0, as does the amount on the check, but that is the message I keep getting.

  2. Dear,

    My company is using Quickbooks online at the moment but we have couple of problems need to be helped please. Our stituation is:

    We have 2 company A and B. the previous accounants, she made the payment from company A account and using write cheque. She had reconciled all the transaction in August. However, she still recorded those transactions into company B account by using entering the pay Bills. Now i am doing the reconciliation for company B but still show up those transaction. What should i do? Delete them as deleting all those bill which she had entered?

  3. Hi!

    I received a payment from a client and applied the payment via “Receive payments” but now the client has short paid for that particular invoice, how do I correct something that I have already receive payment for?

  4. Along this line of undeposited funds, Credit card payments in POS go to quickbooks as undeposited funds but only Master card goes to the undeposited area to be reconciled with our credit card bank. The other types of cards goes directly to the credit card account and in order to reconcile the credit card bank statement I have to post the deposit to cash in drawer since there is nothing in undeposited funds when there is more than one CC payment of different types on the same day and then make Journal Entries to remove the one already in the CC account & post to cash drawer to remove it from cash in drawer. Seems like there should be something different I can do. Can you help me?

  5. We use an online scheduling system for our service that also functions as invoicing. The totals of these invoices are uploaded into QB. However, when there are changes in the schedules, we credit our clients outside QB and the totals for payment are no longer aligned. The discrepancies cause lots Unapplied Payments under Credits in QB which keep on building up. What to do? Do I need to write these away under journal? And if yes, how?


    • Chief Mechanic says:

      As a general rule, you want to have your invoicing and payment processes under the same roof. If you use a service that handles invoicing and credit memos outside of QB, the best approach is to record customer payments there. Then, you only transfer revenue and collections to QB; the other system maintains your A/R. When you deviate from that setup, you create the problem you described.

  6. hello,
    I’m new to QB. We use the premier manufacturing and wholesale edition 2012.
    So, we also receive payments by ACH. Will this affect anything if the “Use Undeposited Funds as a default deposit to account” is checked?
    please let me know. thank you!

    • Chief Mechanic says:

      You create what is called a “contra-account”, such as “allowance for bad debts”. When you take the expense, you debit an expense account and credit the contra account. The account type for the contra account is “other current asset”, not an A/R account. Thus, you don’t have to specify a customer when you record the entries.

  7. Hi, I have a perplexing problem. I entered 2 credit card payments that we received from a customer under the wrong month. I discovered this only AFTER I started reconciling the bank account where our credit cards are deposited. So, I thought I would fix it by deleting the deposit and re-entering in the checkbook with the correct date. When I did this, I was not allowed by QB to use undeposited funds so this was not the fix I was looking for. How can I fix this?

    • Chief Mechanic says:

      If you’ve completed your bank reconciliation, you can undo it.

      You can’t edit customer payments once they’ve been included on a deposit, so you can delete those payments from a deposit, edit them as needed, and finally add them back to the deposit to return the deposit to its original amount.

  8. Here’s my fiasco:
    When I started up a new QB’s company, I wasn’t aware of the ‘Undeposited Funds’.
    When I rec’d payment from customer I invoiced, Here’s what I did:
    I clicked Rec’d Payment which opened up the Customer Payment window.
    I typed in customer
    amount of payment, date, etc and checked off the corrosponding invoice this payment was applying to.
    I didn’t notice that by default, it was getting deposited into Undeposited Funds.
    (I’ve since gone into preference and made bank my default acct for deposits)
    All bank stmts have been reconciled
    I guess I manged to deposit the funds into right account after the fact
    but now my A/R account is -$130,000
    Some of those customers I guess that had funds go into undep. funds acct, now they show they have CREDITS available.
    Oh please can you help me?????aarrggghhhhhh

    • Chief Mechanic says:

      You don’t say how you managed to reconcile your bank account. If funds were deposited into your undeposited funds account, you would have had to make deposits to get them out of undeposited funds and into your bank account. You’d have to review the entries you made to reconcile your bank account, because it’s likely those were incorrect.

      Unfortunately, this is a difficult problem to troubleshoot via comments on a blog. To solve it yourself, your best approach is to start small and to take 1 customer or 1 transaction and review how it was recorded. That will give you clues as to what went wrong, and you can expand that by looking at others. Once you have an idea of what was recorded incorrectly, you’ll have your work set out for you. If that’s too much work, consider finding a local QB consultant who can look at your actual data and help you sort things out.

  9. I am trying to update my companies donation tracking and receipting from paper to Quickbooks. I set up the receipts and use the banking–make deposit for getting it into the correct bank account. The problem I am having is when I am tring to assign a “from account”. Is there a way of changing the account from undeposited funds to a different account? (Like Contribution–>unrestricted as this is how we have done it in the past?)

    • Chief Mechanic says:

      It’s not clear what you’re asking. Let’s say you want to record a contribution. There are many ways to do this: Sales Receipt, Invoice, or General Journal Entry. If you use a Sales Receipt and you receive a $100 contribution and you are using an undeposited funds account, then undeposited funds gets debited and the account associated with the item on the sales receipt (which could be “unrestricted contributions”) gets credited. Then, the make deposits function moves the funds from undeposited funds to your bank account. Those concepts apply if you use other methods to record revenue as well. From your question, it sounds as if you’ve missed the step of creating an item to be used on an invoice or sales receipt that points to a revenue account such as your “unrestricted contributions” account.

      When you use Make Deposits with the undeposited funds account, all you’re doing is moving funds from 1 asset account to another. For small transactions, you can bypass undeposited funds altogether by simply setting the “From Account” to be your revenue account (in this case, “unrestricted contributions”). Such a deposit will increase your bank deposit (by a debit) and increase your revenue (by a credit).

  10. I’m new to QB & using Pro 2014 software. I deposit funds into my business bank account as well as show credits towards invoices. The deposits show as ‘undeposited funds’ on my ledger/register. My question is, how to show credits as deposited towards the actual invoice/customer?

    • Chief Mechanic says:

      The process works like this: 1) you receive a payment from a customer (see Customers->Receive Payments). That puts the funds in Undeposited Funds and marks some or all of the invoice paid. 2) you group 1 or more of those deposits using the Banking->Make Deposits function. That moves the funds from your Undeposited Funds account to your bank account.

      From your question, it sounds like you’ve missed step #1. Since the Make Deposits function groups items in the Undeposited Funds account, if you need to make a non-customer payment deposit, you either need to make 2 separate deposits or you need to use a general journal entry to get these funds into undeposited funds.

      • Thanks for the reply & this is the process that I’m doing right now. Please let me know if I missed a step or if I need to include a step:
        1. Service is finished & invoice given to customer
        2. Customer makes payments – full or partial payments given
        3. I make deposit into my bank business account
        4. In QB – Receive Payments – then show amt & payment type to specific invoice
        From that point I’m not sure if I finish process in QB. When I pull report, it shows funds in Undeposited Funds.

        • Chief Mechanic says:

          Let’s ignore when you actually make the deposit to your bank. Good practice in QB is:

          Work completed -> prepare invoice
          Customer makes payment -> in QB, you use Receive Payments function to record it
          You visit Banking->Make Deposits and combine any customer payments you will deposit
          You print a QB deposit slip (if needed) to confirm your deposit amount
          You make a deposit in that amount at your bank

          Your list of steps has those slightly out of order. What’s important is that you use the Make Deposits function to deposit the exact amount you actually deposit in your bank. Therefore, if you get 5 customer payments and deposit each of them individually over a 5 day period, you should not use Make Deposits to combine those payments into 1 deposit. Your accounting has to match what you actually do.

          If you’ve completed those steps, there shouldn’t be any monies relating to those transactions in undeposited funds. If you visit Make Deposits and click the Payments button, you will see the transactions in Undeposited Funds. It’s possible that you entered duplicate payments. Further, keep in mind that a Sales Receipt is like an invoice + a payment combined. If you perform a service and the customer pays in full and you enter a Sales Receipt, you do not enter a separate payment; if you do, you’d be duplicating payments. One way to check for duplication is to open Customer Center and look at the balance of a customer and see if it matches what is really owed.

          • Thanks Chief Mechanic for this reply!! This helps so much & a good QB guide.

          • I also am having problems with undeposited funds. Most of our payments are in undeposited funds but when I go to the make deposits screen, they are not there to check and make a deposit.

          • Chief Mechanic says:

            The first step is to make sure you have the undeposited funds preference enabled. Once on the Make Deposits window, you can click the Payments button to show any payments available to deposit, but this should appear if you have payments.

            Another approach you can take to debug this is to do a search for a payment that you know you posted, preferably one with a relatively unique amount. If you find out where payments are ending up, that can help you to debug this situation.

  11. I just opened a store and I have never used Quickbooks before. I have made round dollar deposits to the bank account, building up extra in the till. Now, I choose Undeposited funds for the deposit of $300 and have customer sales of 307.62. I try to return the $7.62 to Undeposited funds for addition to later deposits, but that account is restricted. How do I account for dollars left in the till?

    • Chief Mechanic says:

      You don’t “return” 7.62 to Undeposited Funds. Instead, when you use the Undeposited Funds account, all of your customer payments go into this account. In other words, after receiving $307.62 from your customers, your Undeposited Funds account should have gone up by that amount. You use the Make Deposits function to deposit $300 of that to your bank account. It’s hard to deposit a whole dollar amount if you receive all of your payments by check; your whole dollar method only works when your customers pay in cash. With 307.62 in your Undeposited Funds account, you are left with 7.62 after you set aside $300 for your deposit. In other words, the 7.62 is what is left over; it’s not what is returned.

      If you print a balance sheet, your bank balance should be accurate and your Undeposited Funds account should reflect your cash on hand.

      • Hi, I just moved my business onto QB 2010 and I’m having a problem with negative accounts receivable balances. I am entering customer receipts via the “Customer Receive Payments” function then “Banking Make Deposits” function. These actions allow me to balance my check register with my bank statement but I am left with negative accounts receivable balances. I have not entered any invoices. Is this my problem? If so, how to I go back and correct?


        • Chief Mechanic says:

          Run a Profit and Loss statement for a period in which you know you had revenue. If it doesn’t show any revenue, then that’s likely the source of your problem. When you receive payments, you should have noticed that you didn’t have any outstanding invoices from the customers who pad you. Once you enter the invoices, you’ll need to go back and apply the payments to the invoices, since you didn’t enter the invoices first. If you find it easier to record revenue when you receive payment, in the future you can use a sales receipt. A sales receipt is just like an invoice that is paid in full when it’s issued, so it combines the step of creating the invoice and receiving the payment.

  12. Hi,
    I’m having a issue with my A/R being in a negative due to security bond payments. We are a hire company and take securirty bonds while equipment is on hire and is then refunded less any damages etc. The bond payments are not actual income only the amount taken if there is damages is. How do I set up a an account that records the bond payments and refunds but doesn’t go to A/R?
    Have a new quickbooks 2013 version about to start a fresh as old 2004 version has a couple of issues and don’t want to carry them through to new version.

    Thanks very much

    • Chief Mechanic says:

      Your bond payments are liabilities. If you are invoicing for them, you can create an item for this charge, and have the item point to a liability account. Then, when you invoice for the damages, you pay the invoice with that same item but with a negative amount, so your liability account is reduced. You refund the remaining balance with a check.

  13. I use QB 2013 for work. When I record payments from customers they go into the undeposited fund account. After I deposit the money in the bank, I go back into QB to record the deposit. I just discovered that several of my deposits did not record into my general bank account as deposits. I don’t know where they went. Thank goodness I have all my deposits and was able to go back in and find the amounts to delete these deposits and then record them.
    Do you have any idea why they would not show up automatically. This did not happen with all my deposits only round 10 and in different months!

  14. Stephen says:

    Chief, you are the Man! I am a sole practitioner using Timeslips Tal Pro 2014 to link with QB Pro 2013. I have Tal set to cash basis because I need to be able to manually post invoices in QB to use QB’s ability to categorize customer and fee types. Timeslips does all of the billing but can’t do any categorization other than “fees” and “costs”.
    Tal tranfers invoice payments from clients as G/L entries to Undeposited Funds and Revenue in QB. In the case of payment from trust account funds, Tal posts to Undeposited Funds and Suspense. If I receive the payments in QB, it shows the correct balances in the Oustanding A/R, but doubles the revenues and cash when I make the deposit. The only workaround I’ve found to work is to send both sides of the entries to Suspense account, and do a manual receive payment to pay down the client’s A/R and deposit to cash. This effectively negates the transfer but keeps Tal happy.
    What am I doing wong? Is there a proper way to handle these transfers? If I set Tal to accrual method of transfer, can I somehow still manually post invoices in QB without doubling up A/R and Revenues? Thanks so much for any insight you can provide.

    • Chief Mechanic says:

      Let’s simplify: you’re using a 3rd party program for your invoicing. That means you have to do 1 of 2 things: either set the 3rd party program to accrual basis and then enter payments in QB or set it to cash basis and never enter the payments in QB. Your statement “if I receive the payments in QB” is what is causing the payments to be doubled up under the cash basis. Your transfers from the 3rd party program seem correct, except that your Suspense account is really a current liability account.

      Of the 2 methods, the first is the better choice, because it will allow you to use QB to prepare your income statement and track your A/R. Using this method, you’d set Timeslips to accrual basis and invoices would debit an A/R account with the name of a valid QB customer (a requirement of QB) and credit a revenue account. Then, you’d enter your payments in QB, not Timeslips. Payments would go to undeposited funds, and you’d use the Make Deposits function to gather your payments into a single bank deposit. As to whether Timeslips can integrate with QB in this manner, that’s a question better asked of Timeslips. QB has certain requirements for posting transactions to A/R accounts, and if Timeslips follows them, it should work.

      You can use either cash or accrual basis reporting in QB.

      Given that you might be switching how you record transactions, it might take you some time to get things squared away. Be sure on your first cycle that your QB A/R is accurate, because if it isn’t, you’ll be forever chasing your tail trying to get it right.

      Hope that helps.

      • Stephen says:

        Thanks so much. Yes, Timeslips appears to support transfers to QB customer A/Rs. If I use the accrual method in Timeslips, how does the Timeslips client account balance get updated for payments received in QB?

        • Chief Mechanic says:

          I don’t think there would be information flow in that direction. Are you planning on sending out statements in QB or Timeslips? If you record payments in QB and send statements from there, the account balance in Timeslips would be wrong but it wouldn’t matter.

          If you use cash basis in Timeslips, your A/R will be accurate in Timeslips, but not in QB. Your QB cash basis A/R, of course, will be accurate, because it will be $0, but QB won’t have a clue about accrual basis A/R, because you only transferred completed payments.

          Whenever you use 2 programs as you are using QB and Timeslips, you have to decide where you want information to be accurate.

          • Been running tests using the various set-ups this morning and agree I have to choose between the 2 programs. Since I need to bill with full trust accounting, Timeslips gets the nod. I will be using TS in cash method, washing the G/L through Suspense, and posting manually to QB. Thank you for all of your insight – it has helped me a great deal.

          • Chief Mechanic says:

            Glad it helped. Keep in mind that with the method you described, your cash basis financial statements should be accurate in QB, but your accrual statements won’t be. Creating a test company is a great way to see how transactions will impact your reported results, and it’s easier to conduct those tests before you finalize your practices.

  15. I have multiple sources of income being tracked through QB and I’d like to track from where they come. If my deposits are going through undeposited funds I can’t differentiate the Income category right? I’m not sure I’m asking the question correctly, I just know that I’d like to keep track of which deposit came from which source and if I first send it through UF then that is what shows up on the Chart of Accounts and the reports rather than from which job I earned it.

    Thank you by the way. Your explanation was by far the best explained I’ve read thus far.

    • Chief Mechanic says:

      Your confusing 2 things: income and changes among assets. You record your multiple sources of income when you impact revenue, which you can do by recording an invoice or a sales receipt or recording a general journal entry to a revenue account. When you receive payment, you are converting 1 asset – an accounts receivable – for another asset. This is where the undeposited funds account comes in. When you record the payment, A/R goes down and undeposited funds goes up. Then, when you record the bank deposit, undeposited funds goes down and cash in bank goes up.

      Since you can track sales (income) by item, you can even send all of your revenue items to a single GL account and review sales by item to track your multiple sources of income. This allows you to keep your P & L a high level summary but have sufficient detail to run your business.

      • Got it. Thank you. I guess, though I get what its doing, undeposited funds throws me.

        • Chief Mechanic says:

          Think of the undeposited funds account like a cash box you keep in your desk. Today, a customer gives you $50 cash. Tomorrow, another customer gives you a $100 check. On the third day, you take the total of $150 to the bank and make a deposit. Your undeposited funds account is just like that cash box – it’s a place for you to combine and accumulate funds until you deposit them into your bank account. Undeposited funds is an asset just like your bank account and that cash box you keep in your desk.

          Hope that helps.

  16. I am new(er) to QB. I’ll try to give you the details to hopefully help you assist me. We use a different program to records our patient transactions. Then each night I batch close our payment system (Debit, Visa, MC), ensure it matches the sales, and then enter the monies and sales into QB. We have a “Cash to be Deposited” (CTBD) account that was set up much prior to me joining the company. Each total for cash, cheques, debit, visa and mc are recorded on a line as CTBD. In the past, when we do the bank reconciliation, the deposits for visa, mc and debit were just added up from the statement and entered as a journal entry for the bank account and “reconciled” Problem with this is that there is no check to ensure all daily transaction totals were received from the payment system. Is there a simpler way to do this so when I do the bank reconciliation each month, I can ensure the deposits match up with what our sales were?

    • Chief Mechanic says:

      It’s not clear if you are recording only payments in the 2nd system, or if you are recording both invoices and payments. The only way you can find out if there are unpaid invoices is to create an invoice in QB and record a payment in your payment system for each transaction. You’d send your payments to undeposited funds, and when you received confirmation from your bank that the monies were deposited, you’d record a bank deposit. The balance in your undeposited funds account should match to what you expect to receive from your payment system, and an A/R report in QB would show any invoices that weren’t paid.

      • Sorry – we have a customized program that we book patients and do all the billing and receiving of payments. We don’t put each individual one into QB. Each day, I put an entry with the total amount of Debit, total amount of Visa, total amount of MC and cash/cheques into a journal entry (separate line for each one) into an account they call Cash to be Deposited (CTBD).

        When we get the bank statement and do a bank reconciliation, what’s been done in the past is that the total deposits for Visa/MC/Debit that show on the bank statement are added up. That total is then entered as a journal entry in QB as a mass transfer from CTBD to the bank account.

        Problem is: there is no check to ensure that what was deposited into the actual bank matches up with the daily entries that are entered into QB. Just a mass move.

        • Chief Mechanic says:

          It doesn’t matter whether you do a “mass move” or individual general journal entries. Let’s say you reconcile your bank account as of 6/30 and you enter your single transaction to move all payments from CTBD to your bank account. If you run a QB report as of 6/30, the CTBD account will either be $0 or have a balance. If it has a debit balance that means there are payments through 6/30 that have not been recorded by the bank as of that date. If those are the payments from the very end of June that will be deposited in early July, it is just a timing issue. If the amount is bigger than you can explain by looking at the transactions from the last few days of June or if the account has a credit balance, then you have a problem.

          The extra time it takes is one reason why it’s not a great idea to use accounting systems that aren’t integrated.

  17. Susan Wink says:

    I have just started working for a company using quickbooks. They have never used the bank deposit function to make the credit to undeposited funds; each customer’s account lists undeposited funds still. They have been using quickbooks like this for years. How can this be corrected at this late date?


    • Chief Mechanic says:

      First, you should generate a balance sheet and see if it shows funds in the undeposited funds account. Second, if there are funds in that account, then the company’s bank reconciliations were either done incorrectly or, more likely, never done at all.

      The problem of skipped reconciliations is a complicated issue to cover in a blog comment, but it is a common cleanup problem, and it’s fixable. The best way to do it would be to print financial statements for each year back to the period in which the bank account was last reconciled. Then, you’d proceed to reconcile the bank account (either monthly or all statements in a year, as a group). Once the bank account was reconciled, you would reprint new financial statements and record any adjustments as reversing entries to put the transaction in the next year. You’d continue with this process to the present, so that all adjustments were reversed into the current year. Hopefully, the cumulative adjustments are small. By reversing the adjustments to the current year, the financial statements AFTER reconciliation match those you printed when you started the process; hopefully, these statements connect to the company’s tax returns for those periods.

      At that point, you would reconcile the bank account monthly and make use of the undeposited funds account as described in this article. The balance in your undeposited funds account should only represent those funds that have yet to be deposited in the bank account.

  18. Kylie McDaniel says:

    Hi Chief!

    I have recently started using QuickBooks and am still getting used to the whole operating system. My question is if you have recorded a deposit and need to delete it, will it go back into the Undeposited Funds Account or be deleted completely from the system?

    • Chief Mechanic says:

      Let’s not use the phrase “go back”. Here’s what happens: 1) you record a payment, so A/R is credited and the undeposited funds account is debited; 2) you record deposit, so your bank account is debited and undeposited funds is credited. The single credit to undeposited funs in step #2 can be the sum of several payments that were debited in step #1.

      When you delete a deposit, you are removing the transaction that was posted as part of step #2. When that credit to undeposited funds is removed, it will appear that the funds did “go back” to undeposited funds, but by deleting the deposit you didn’t move them; instead, you just put a stop to moving them to the bank account. Deleting a deposit has no impact on the transaction in step #1. If you want to alter the amount of money put into undeposited funds, you have to edit or delete the payment transaction (which requires deleting the deposit, the step #2 transaction).

  19. Kim Boyd says:

    Hi. I have a question about crediting pre-payments against future invoices. In our company we receive some revenue from investment firms prior to any invoicing. We set up a Master account for these funds as they come in and sub-accounts for each client that we receive these for. Once the work is done we create an invoice for the full amount of billing. Billing is noted to individual employees in order to track how much each person is billing on a monthly/annual basis.

    Our question is how do we credit the invoice for the amount that is in that pre-payment account so we can see the total amount of the bill, the credit and the remaining due? We have been unable to figure out how to do this so that the person billing gets full credit for the total invoice and the client gets a bill for just the amount due.

    Any help is appreciated.

    • Chief Mechanic says:

      First, you don’t need separate sub-accounts to track the receipts from each customer. You can easily report on receipts by customer. Having multiple sub-accounts is an unnecessary complication, so this recommendation is based on having a single liability account called “Customer Retainers”.

      Create a new service item called “Retainer” which points to your “Customer Retainer” account. Then, if you want to invoice a customer to prompt him to provide a retainer, create an invoice and use the “Retainer” item. If you unexpectedly receive a retainer payment, you can use a sales receipt with the “Retainer” item.

      When you are ready to invoice for services, prepare your invoice as you normally would, using the appropriate items for the services provided. After those items are recorded, add a Subtotal item to subtotal those items. (If you don’t have a subtotal item, create one.)

      Then, to apply any portion of the retainer, record a new line using the “Retainer” item and enter the amount as a negative amount for the amount you’d like to apply. The invoice total will reflect the total of services provided net of the retainer. When you prepare this invoice, it’s helpful to have a report of outstanding retainers grouped by customer, so that you can confirm you aren’t crediting a retainer amount that exceeds what the client has paid.

  20. I just switched back to desktop version from QBO. I noticed that some things are in retained earnings. What all went into retained earnings?

    • Chief Mechanic says:

      This isn’t really on-topic. Your best bet is to do a report of the transactions that are in retained earnings to find out what’s in that account.

  21. So glad I found your article. Although I am pretty familiar with the Undeposited Funds account, I am having an issue.
    I have an integration going: to QB. It worked fine until we created a new QB company and a new integration with Customers pay on or we receive their payments in there. then brings the transactions over to QB. I can see the invoices marked paid, I can see fund going into Undeposited Funds account. But when I try to make a deposit in QB, it doesn’t find any payments.


    • Chief Mechanic says:

      Here are a couple of things to check. First, does your undeposited funds account have a non-zero balance? When records a payment in your undeposited funds account (an asset account), it should go up, that is, have a bigger debit balance. If it doesn’t, something’s wrong with the way your integration is set up. Second, examine one of the payments transferred by by editing it. Is the data complete? Does it include a payment type that matches what you set up in QB? When you make a deposit, QB can organize payments by payment type, and if is sending over incomplete information, your payments may not appear when you open the Make Deposits window. One final note: the Payments button in the Make Deposits window should bring up a list of all the payments that are pending deposit. Based on your comment, you are indicating that list is empty even though your undeposited funds account has a balance. If you click the Payments button and the payments are there as expected, that’s the way QB works. It does normally open that list for new deposits if there are items to deposit, but if the data is there and the problem is that the list is not opening, that’s a different type of problem. Post back with the results after a little more investigation.

      • Barbara V says:

        Replying to the empty deposit list.
        the Undeposited funds account is increasing, so the payments are coming through from to QB.
        When I click to edit the transaction, the payment method part is empty. I tried editing and adding payment as check. transaction still doesn’t appear to be available for deposit in the list.

        • Barbara V says:

          Also, if I do receive directly in QB the payment, then I can see it in the drop down list for deposits.

        • Chief Mechanic says:

          Your next step is to check with From your description, it sounds like the transactions is recording in the undeposited funds account are missing certain data fields, which causes them not to appear on the list.

          • barboryte says:

            So we did figure it out: By my own mistake, I created a Undeposited Funds account in QB. Apparently, QB will create it’s own Undeposited Funds account after first payment is received. So integration with wasn’t working properly since it was looking for the QB created account, which I hid….Dah dah!

          • Chief Mechanic says:

            Good discovery. The undeposited funds account in QB is a special account type, and you’re right that QB creates this account when you enable that preference. If you create or rename another account and give it the name of “undeposited funds”, that account isn’t the special account that QB is expecting. A good way to troubleshoot problems like this is to print a balance sheet with a date after your latest transaction. Even if the account is inactive, it will appear on the balance sheet if it has a non-zero balance.

  22. Please help. My profit & loss report no longer shows profits! It is only showing the losses. My customers sometimes pay after I invoice them and sometimes I get a retainer for services up front. I have both in Feb. but neither have showed up in that statement. I have a prior year of correct profit & loss reports so this seems out of the blue. I also noticed that I must be using the undeposited funds catagory as this always shows up when I receive a check and notate the payment from a client before it is deposited into the checking account. When I come back and select deposit funds, it automatically catagorizes it as undeposited funds (but it is not deposted). I’m so confused and I’m not finding any help online for this topic. Any suggestions would be greatly appreciated. I don’t know much about accounting so I may not even know how to best explain what I”m seeing in a way that makes sense.

    • Chief Mechanic says:

      Yours is a complicated question, and if you’re not familiar with accounting, it might be worth hiring a local QB expert to assist you.

      There are a number of things that can impact what profit/loss is reported. First, consider cash vs accrual basis reporting. This is a setting on most QB reports. If you opt for cash basis reporting, income is only reported when it is paid for. Therefore, if you invoice a lot of customers in February but are not paid in that month, you haven’t generated any cash basis income. Second, consider retainers. A retainer is normally a liability to you, because if you don’t complete the work, you have to refund some or all of the retainer. When you complete the work, you create an invoice and you use the retainer to pay the invoice. Therefore, you can bring in a lot of funds from retainers in a given month, but you’ve earned no income from them until you do the work and invoice for it. Third, other than cash basis, a customer paying an invoice doesn’t trigger income – doing the work for a customer does. Therefore, on accrual basis, to generate income, you have to produce an invoice that uses items that point to accounts on your chart of accounts that are income accounts. On cash basis, that invoice has to be paid.

      If your QB reports aren’t showing the income you expect, you could have problems tied to any one of the above items plus others that don’t come immediately to mind. You can start by looking at your income accounts for the time period in question and trying to find out why the transactions you expect to be there aren’t.

      • Thank you so much for the response to my question. I have been able to determine that it had to do with the accrual accounting style. No invoices were generated in the month of Feb. so that must have been the issue. After a year and a half I still can’t get my head wrapped around accrual accounting and the more research I do the more I find that it might not be the best system for my type of business. How hard is it to switch to cash basis accounting? Would I have to change everything in my QuickBooks and file something for taxes?


        • Chief Mechanic says:

          No, you don’t have to switch anything in QB. On reports, QB can report in either cash or accrual basis. Generally speaking, accrual basis is the most accurate for most businesses, because it forces you to include expenses that you have incurred even if you haven’t paid them. However, many businesses that have long collection cycles (ie, it takes customers a long time to pay) find that cash basis accounting minimizes tax liabilities until they have the cash from customers to pay them. You can provide accrual basis statements to your bank and use cash basis for tax reporting, but your tax reporting election is harder to change. You should consult with your tax advisor to see which reporting method is best suited to your business and to assist you in changing that if you’ve started with the wrong tax reporting method.

  23. Howdy Chief!

    Thank you for the information you disseminate here. I’ve found it to be very clear and very useful.

    I am just getting Quickbooks set up (2011 Premier) for my retail business and am running into an issue I hope you can help with. We have been open nearly two years and have relied on our POS system and manual spreadsheets to keep the books until now. I have imported a year’s worth of sales receipts from my POS system (along with lots of other data entered manually or imported). I am set up to use the undeposited funds account. My problem is the level of effort required to manually select each sales receipt in order to create each day’s deposits. I had foolishly expected Quickbooks would be able to figure that out since the date and payment type are included in the sales receipt transaction data. Even on a daily basis going forward this seems like a very labor intensive process. I may have have as many as a couple of hundred receipts in a day.

    I chose to send each sales receipt rather than a full day’s batch because
    1. I thought the more details I had in my accounting system the more flexibility I would have.
    2. I want to track inventory at a detailed level in Quickbooks.
    3. I had relatively easy access to that data and using TPI 5.0 to do the actual import was simple.
    4. I didn’t know any better.

    I’m hoping there is a way I can get Quickbooks to accept an import of the data in order to avoid the manual processing. Do you know if that’s possible or if not, do you have any other suggestions?


    • Chief Mechanic says:

      I’d revisit your setup. Generally speaking, keeping details in 2 systems can create problems, not add flexibility. For one thing, you’d be adding details into QB that will cause your QB file to grow and get slower, when those details are better used in the separate POS system, which presumably has reports designed to make better use of its data.

      You should have a QB compatible POS where you manage inventory and sales in the POS system and that sends summarized data to QB and that connects to QB via its SDK. This is especially true for your transaction volume. TPI is a great tool, but using it for imports of small batches when QB compatible POS systems exist is just making extra work and creating more risk that your accounting data gets out of sync. It might be acceptable as a short term fix, but it’s not a good long term approach.

      Credit card processing is one of those areas that challenges my phrase of “generally speaking” above. Ideally, you want your POS system to understand how your merchant account closes batches, so your merchant account and POS batches are in perfect sync. While that’s the ideal, it’s often hard to achieve, and unfortunately, some choose to just send detail sales receipt data to QB only for the purpose of recording deposits. You’ll have to closely examine how your POS and merchant accounts handle batches, and contact them both to see if they can sync perfectly. Sometimes, you can’t get perfection, but you can get pretty close. For those situations, we’ve sometimes set up a POS clearing bank account, and had the POS system send summarized sales transactions to that clearing account. Then, the exact merchant account batches are transferred to the undeposited funds account, where they are deposited in the normal manner. This works if your POS and merchant accounts are almost always in sync, but sometimes a transaction is in the batch of 1 system but not in the other until the next day. This allows you to verify that your POS and merchant accounts have the right totals but were just off slightly on timing, while at the same time keeping your bank register accurate.

      You can probably get TPI to create a file that you can import to QB. Your best bet would be to contact the TPI folks for how to set up the import.

  24. Elise Perez says:

    I am very frustrated and traumatized. I was scanning in a check today (one of my first checks to be scanned in), and it was payment for a rental property. I was told to create an invoice or sales receipt to accept payment. Once I scanned in the check, I created a Sales Receipt and created a non-inventory part item called ‘Rental’. Then, in description placed rental property, anyways payment was processed. I went to “make deposits” window, and under account from “Undeposited” was check for all my checks. I was supposed to list “Rental Income” for the check that was for rental income, but didn’t. Anyhow, now I have the amount deposited, plus another transaction for the rental amount ‘deducted’ from my bank account in my check register!!! How do i fix this?!!!

    • Chief Mechanic says:

      Never get traumatized with QB, because just about anything is fixable.

      First, a Service item might be better for your rental income instead of a non-inventory part. Second, you can always delete a deposit and any items on that deposit that came from your Undeposited Funds account will remain in that account so that you can fix the deposit. I’m a little confused by your need to list “Rental Income” on the deposit. Keep in mind that the notion that this is rental income has nothing to do with the deposit. That’s controlled by your sales receipt or invoice, and in turn, the items on those forms. If your sales receipt has an item that points to a general ledger account of Rental Income, then your revenue for the transaction will be in the right account. If not, fixing the deposit won’t fix the problem. You have to fix the underlying item or sales receipt/invoice. Always keep in mind that deposits have nothing to do with revenue. Deposits are just moving an asset from 1 account to another, in this case from Undeposited Funds to your bank account. Your revenue is managed with items and customer forms such as sales receipts and invoices.

      I’m also confused by the fact that rental income was deducted in your check register. You might have not set up your item correctly. Your item (either a service item or a non-inventory item) has to point to a revenue account, in this case rental income. When you generate a sales receipt, undeposited funds are debited (increased), and the items (at least those with positive amounts) on the sales receipt are credited. Since these credits normally go to income accounts, your income goes up. If you set up your item to point to your bank account, the credit (decrease) would go to your bank account, which would be an incorrect result.

      Therefore, the first step to fixing any problems is to review your item setup. Hope that helps.

  25. My company (Co A) has been purchased (by Co B) and I am, for the first couple of months recording receivables in the old company’s quickbooks. I added a new accounts receivable for Co B. We use classes, so everything that is recorded for the new company uses it’s class (Co B). When I run a balance sheet for the first month of business for Co B, it shows a negative amount in undeposited funds even though I processed the payments/deposits in the same method I use for Co A. Help?
    Thank you.

    • Chief Mechanic says:

      If Co A and Co B are 2 separate company files, you should be able to track this down by looking at a journal for the undeposited funds account in Company B. From your description it sounds like you are recording the A/R payments in 1 file (Company A), and then making the deposit in a separate company file (Company B). You can’t do that. You have to record the payment and the deposit in the same company file. You’ll need to check with your accountant for how Company B handled the purchase of Company A, because that will influence how you fix this.

  26. I am new to Quickbook. I am using Non Profit 2010. we have contributions once per week in some cases we have to pay out of the cash received. How do I account for this cash payout which affects that amount we will deposit into the bank? Is there a was that I can account for this and it reflects in the undeposited funds that when I make a deposit this amount would be in there as a negative amount?

    • Chief Mechanic says:

      The simplest way is to record your contributions as you normally would, and then start to make a deposit for the full, gross amount of the deposits. Before saving the deposit, add additional line items to reflect the expenses you paid out of those gross receipts. Expenses would be recorded as negative amounts, so that the gross amount of the deposit would be reduced to the amount actually deposited in the bank. If you need more detail on your expenses than this method allows, you’d have to set up a petty cash bank account, record the gross amount of the deposit to that bank account, record your expenses, and then make a transfer from the petty cash bank account to your regular bank account.

  27. Chief –

    I am having a real issue as I am working through QuickBooks NonProfit 2008. I have reconciled 2009 and was 895.00 off of the former bookkeeper. Looking at the transaction register, I can see the issue is that there is a 11000 A/R for $145 and its in the Payment column. The payment which in full was 620.24 was accepted about a month later and has wound up in 12000 Undeposited Funds. A similar item for $750 was put in on 9/14 for another A/R and then marked paid on the invoice and wound up a few days later in undeposited funds. So essentially the payment is being zeroed out. When I look at the 11000 register it shows the invoice entry for each with INV but then it shows in the next line a PMT with a different number to it, but it is marked paid on that line. The 12000 account is showing a 0 balance, yet when I go in there it shows the same transactions one as an increase and one as a decrease, so again zeroing each other out. I am not sure where this $145 is showing up for the first payment b/c it was all paid in once check, reflected in the deposit later.

    Thanks for your advice in how to fix this so I can go through and reconcile 2010.

    • Chief Mechanic says:

      To help your understanding, if you use the undeposited funds account, a customer payment results in a debit to the undeposited funds account and credit to A/R on the day the payment is made. This shouldn’t happen “a few days later” as you remarked in your comment. Therefore, you can check the payment date in customer history to match with transactions in undeposited funds.

      When you make a bank deposit, your bank account is debited and undeposited funds is credited on the date of the deposit.

      Are you trying to reconcile your bank accounts or GL accounts? For your $145 in GL 11000 A/R, find the customer and you should see an equal and offsetting debit to undeposited funds. For the $620.24 payment, undeposited funds is where it should be. If it is still in undeposited funds, it means you have not turned those funds into a deposit. You can run a balance sheet report to see if there are any funds remaining to deposit, or click on the Payments button in the Make Deposits function. Your problem may be that funds were never recorded as a deposit in QB but were deposited to the bank account; another common problem with small non-profits is that payments that come in the form of cash are never deposited but used to pay other expenses. Your problem may be that the deposit was recorded but never actually made.

      You say you are “895.00 off” but you don’t specify exactly where you’re off or what the direction of the discrepancy is. Those are good clues as to the source of the error. If you are reconciling a bank account, and your QB balance is $895 below your bank balance as of that date, that suggests a deposit was made at the bank but not recorded in QB. That in turn would cause you to look at the undeposited funds account. Start with the GL account that’s off and the direction it’s off and ask yourself what events would cause that type of discrepancy. Don’t limit your list of possible events to what you think is likely; include even the unlikely causes, because sometimes that’s where you end up. Then, investigate each of those possible events in turn. It may take a bit, but you’ll find it.

  28. Pamela Dever says:

    I have recently been hired by a small company to try to clean up his Quickbooks Pro 2010 and make sure all his accounting has been done correctly. I’ve already discovered his AR is all messed up. There is one large entry that says “Customer Deposits” which tells me someone manually added up all the invoices and posted one large amount, which I’ll have to go back and try to balance.

    My immediate concern is his AP. It appears that the previous person downloaded bank statements, up to Oct. 31. The Inbasket had a lot of un-entered invoices, most of which date after that time. If I enter those now, before we download his bank statement, will the download automatically reconcile those items? when I asked a friend of mine that also uses Quickbooks she said she never downloads the bank statements, just manually reconciles to the printed statement. Would I be better off to do it that way, especially since I’m unsure what has and has not been input?
    The client insures me all the bills have been paid, but is concerned about his AR because he has at least one customer that has told him they haven’t received a bill. I believe I’ll find those once I balance that large deposit.

    • Chief Mechanic says:

      On “customer deposits”, they may be just what they say they are, ie, deposits in advance of delivery of a product or service. These would be a liability. When a sale takes place, the liability would be relieved and the funds applied as a payment for the sale.

      Bank reconciliations don’t reconcile invoices. To be clear, invoices go to customers for products or services; bills come from vendors for goods or services a vendor charged the company. A check or bill payment check (used to pay a bill) is what would appear on the bank statement and what might be reconciled using online banking. Some firms just record a check, instead of doing 2 steps (a bill and later a bill payment check).

      If the firm has not been current with online banking or has not entered customer deposits in an up-to-date manner, the first online banking session can import transactions which are duplicates. For that reason, some prefer to reconcile from the bank statement. However, if you’re current on your accounting and have regularly used online banking, it can make the reconciliation process go faster because it can automatically match up transactions. Since you are unsure, you are better off reconciling from the bank statements. Once everything is current, you can consider using online banking, but expect to have to delete some duplicate transactions in the 1st use.

      Good luck.

  29. Problem. Bank balance does not equal bank reconciliation. The amount is exactly the same as a deposit that was deleted in a prior year because it was with another entry and is showing in Cash on hand cash to deposit on the balance sheet It needs to be redeposited. I cannot make the deposit because it does not show on the make deposit screen. I cannot make a journal entry to correct because I then have a “negative deposit” listed in the deposit screen forever. I know the date of the entry but I just cannot re-deposit . Any suggestions? The most important issue is to correct so that the bank reconciliation will equal the balance sheet going forward. It was not noticed until months later unfortunately.

    • Chief Mechanic says:

      How about making a GJE from the cash on hand account (where the funds are) to the undeposited funds account? That way, you can record a new deposit using the Make Deposits function. Once you have made that deposit, go to your bank account register and manually check off the deposit you made in the reconciled column so that it displays a check mark (not an asterisk). At that point you should be able to complete your bank reconciliation. You can always click the Leave button to save your reconciliation work and return to it later.

  30. I’ve used Quickbooks before in my previous position, but not to the degree that I am using it now. We have run into two different problems, though both concern credit cards.

    1. As we were starting up business (ie, me getting hired and setting up QB), we hadn’t been paying credit card transactions through credit card, but through the enter bills/pay bills option. Now when we do a transaction detail, for example, it now shows charges for the credit card in both Accounts Payable and credit card. Is there anyway to delete the AP portion and just have them in the credit card portion?

    2. My boss is obviously paying credit cards off on a monthly basis and he may or may not use the bank account we have set up. The problem we have run into is that Quickbooks apparently doesn’t think payments can come from anywhere but a bank or a credit card, so those are the only options we have for when he makes payments that don’t come from his bank account (or that of a wire transfer, which is still tied to the bank). So far, I haven’t found any solution as to getting a non-bank payment to pay for items on the credit card for instance.

    My boss tried the undeposited funds earlier and it wouldn’t let him move money across. Is there some way around this or do we have to go the complicated QB way of things?

    • Chief Mechanic says:

      Gina – It’s not so much the “complicated” way of doing things as it is keeping books separate and accurate. The things QB is forcing you to do are typical for all accounting systems. Let’s first identify the best approach for dealing with credit cards, and then see how this can be adjusted to your circumstances. The best approach is to set up a credit card account for each credit card which you reconcile regularly, record your credit card charges and credits to that account, set up a vendor whose default account is that credit card account, and make all payments from a company bank account to that credit card account.

      As to your first question, I’m not 100% clear on what you’re asking. If you pay a bill from another vendor with a credit card, it will appear in both the Vendor Center and credit card account. That’s a normal activity. If you enter a credit card charge as a bill but post it to the credit card account, it will appear in both places. However, with this method you never recorded an expense, so that’s not the right way to account for that type of transaction. To fix this, you’d really need to edit (or delete/void and re-enter) each transaction. One test for this would be to look at P & L for a period where credit card transactions were entered this way. Using QuickZoom reports, can you find the credit card transactions? If not, they’re not properly recorded and as painful as it is, you’ll need to fix that.

      If you entered a vender bill to the credit card company but used expense accounts as offsets, that is still not ideal but you don’t necessarily need to adjust all of your prior period transactions. That’s because the transactions did post to the correct expense account. However, you won’t be able to reconcile your credit card account and, if you use cash basis accounting, your financial statements will be wrong. You can determine if it is worth the time to adjust these transactions to the ideal method I described above. Even if you don’t fix the past, I strongly recommend you stop using that method and adopt the ideal method. It might seem like more work at the beginning, but you’ll face fewer headaches in the long run.

      For your second question, when you pay your company credit card, you have to pay it with a company (not personal) asset. If your boss wants to use personal funds to pay the company credit card, one workaround is to record his personal funds as contributed capital. You could enter a general journal entry where capital is credited and the bank account is debited. Then, you’d enter a payment from that bank account to pay the credit card in the same amount. The problem here is that this deposit and check won’t appear on your company bank statement, since they weren’t actually made with that account. But the amounts will offset, and when you do your bank reconciliation, you’ll have amounts on each side of the ledger to check off.

      Accounting can seem complicated at times, but it’s part of keeping your books and records straight.

  31. Just need one question answered – hope it’s understandable….

    I am learning a new way to use QB starting with Jan of this year. my daily sales have been entered using a sales receipt where I put the total amount of taxalbe sales, then I subtracted the amex, discover and visa cards from this total and the amount on the bottom of the sales receipt matches my daily cash sales. I have all the deposits coming to the undeposited funds box and I have successfully entered all the cash deposits for the year to date. What I now cannot figure out when I go to reconcile January is how do I get the credit card deposits into the undeposited funds box?? I don’t think I go to receive payment…. Do I add a deposit?? Not sure which category to choose if I’m adding a manual deposit? My bank account?? I think I can get all caught up if I can figure out this one missing step….. Thank you in advance for the help!

    • Chief Mechanic says:

      You can use a similar method to record your credit card sales if you find that this approach works well for you. Simply enter a sales receipt for the gross amount of a sale. Then, use the Make Deposits function to deposit those funds to your bank account. In the deposit window, you can enter your merchant fees and expenses as a negative amount on the deposit, so that the amount matches exactly what was deposited in your bank account. You can use this approach on a transaction-by-transaction basis, or if you’d prefer you can enter a sales receipt that combines more than 1 transaction. When you combine transactions, that makes your bank reconciliation more complicated, because the deposits don’t match exactly to those shown on your bank statement. Therefore, we always recommend trying to get your accounting records to match your bank statement. It’s more work when entering transactions, but it can save a lot of time when reconciling your bank account. You’ll have to determine which approach works best for your business.

  32. Hi. I am new to QB Online Essentials and I have a question related to sales receipts grouped under UNDEPOSITED FUND ACCOUNT. I have entered one whole month of sales receipt for each cash sales transaction and these were under the UNDEPOSITED FUNDS ACCOUNT. Now l want to bank in the sales at a given period of time, let say I deposit to bank account $3000 for the sales from 1st to 9th. Same thing by 14th, I deposit $1000 for the sales from 10th to 14th.What happens to the balance amount? Will it carry over? It seems it doesn’t show. Can help me please. Thanks.

    • Chief Mechanic says:

      You’d use the Make Deposits function to take your sales receipts and turn them into funds in a bank account. You choose the amounts you are depositing so that the total exactly matches what you deposited in the bank. Once you record a deposit, the amount in the undeposited funds account goes down, and the amount in your bank account goes up.

      • HI. Thank you for the reply. I did what you mentioned. Select the sales receipts that will eventually make up the deposit amount. How about if I the amount deposited reflecting on the bank statement is $3000, but the sales from 1st to 9th was at $3327.90. Because normally, we do not deposit the exact amount of the sales in a given period of time, only a partial of it. We do this like a routine so what happens to the balance amount? The balances will just stack up in the undeposited funds? and I can’t seem to find them in the list when I go to Make A Deposit Function. Thanks a lot for answering my question.

        • Chief Mechanic says:

          If you aren’t going to deposit all of your sales, you’ll really need to break your sales receipts down into shorter time periods, so that what you deposit exactly matches the funds from 1 or more sales receipts. If your sales from the 1st to the 9th were $3327.90, you could enter daily sales receipts, then you’d be able to choose the receipts to get a deposit that would be closer to $3000. Note it would not equal $3000 exactly, unless your sales receipts for a group of days equals $3000 exactly.

          Yes, funds will accumulate in undeposited funds. In desktop editions of QB, there is a Payments button at the top of the Make Deposits window. Clicking that button opens the list of the payments in Undeposited Funds that are available to deposit.

  33. Hi Chef,

    Thanks for your posts, your are very knowledgeable.

    I just started to use QuickBooks Online 2012, and having problem with deposits in Bank Register. I want to reconcile my Bank Account but in my Bank Register I found a lot of deposits that are not in Bank Statements. They are related to the client’s invoices and I am afraid of deleting them. Should I reconcile every month and put adjustments entry for each month or should I delete them? I was auditing these deposits and I think these are wrong inputs. How should I delete them so it will not touches client’s balance?

    • Chief Mechanic says:

      Asya – A problem can occur with QB Online Edition if your banking function automatically imports payment transactions before you’ve recorded payments. That can result in duplicates. Before you delete them, I recommend you research several of them. Are the deposits that are not on your bank statement auto-imported transactions? Did you record a payment against a customer invoice and turn it into a deposit? Voiding a transaction is generally preferred over deleting; that keeps a trail of what took place. You can even add relevant notes in the memo should a question arise in the future. Check a customer’s balance and then void 1 of these deposits that does not appear on the bank statement; if the customer balance is unchanged and is still correct, I’d continue this research on the other deposits and void those that are not on the bank statement. You need your bank register to match your bank statement, so this is necessary work. Going forward, be sure to enter your customer payments before your online banking has a chance to automatically import deposits. If auto-import takes place first, it can’t match your deposits to your customer payments.

      Hope that helps.

  34. Vladimir says:


    I am a webmaster for a non-profit organization, so my QuickBooks knowledge is limited to installation and configuration of the software. I have a very limited knowledge of accounting.

    We use QuickBooks 2011 Pro (multi-user) and have an online web store using PDG Commerce software. The online store (shopping cart) is used by our members (customers) to make online credit card payments of invoices (i.e. for membership fees or events). The Accountant’s procedure is:

    1. The accountant creates an invoice in QuickBooks > Customer Center for the customer and sends the invoice to the customer.
    2. Customer makes a credit card payment in the online store.
    3. We import online credit card payments into QuickBooks (with Web Connector).
    4. The transactions are imported as “paid sales receipt” (PDG tech support’s words).
    5. They are entered to Undeposited Funds account and they appear as a line item (Payment?) in Customer’s record (Customer center), matching customer’s name and e-mail.
    6. When the accountant “clears” imported transactions, by checking them in Banking > Make Deposits, they are moved into the bank account (she calls it a Cash account) – however, the customer’s balance is not reduced (zeroed) by the amount of the transaction.

    Our main reason for the online payment system was to reduce the accountant’s workload, so that she would not have to enter customer’s online payments manually into QuickBooks. How do we update the customer’s balance with the imported online payments?

    Note: My other Order import options in the PDG Commerce Merchant settings are: Invoice, Sales Order, Sales Receipt and Estimate.

    Thnak you.

    • Vladimir – It’s important to understand the differences between the different customer transactions in QB. For the moment, let’s focus only on Invoice and Sales Receipt, since those are posting transactions. Sales Orders and Estimates are non-posting transactions in that they do not affect the customer’s balance.

      A sales receipt is a sale that is paid in full when it is made. In QB, there is no extra step to enter a payment. Depending on your use of the undeposited funds account, for each sales receipt QB posts an entry to your deposit account in the full amount of the Sales Receipt. That happens automatically.

      An Invoice can record a sale or donation, but the payment transaction is separate. You can generate multiple invoices for a donor and receive a single payment months later that pays them all in full. Or you could receive a payment that only pays a portion of the first invoice. The possibilities are endless.

      Therefore, which transaction you use depends on how you generate sales for your donors. If you generate an Invoice in advance, deliver it to the donor, and then it is paid, you’ll want to see if your online e-commerce software can process Payment transactions. If it can, these payments would show up as unapplied in each donor’s account in the Customer Center. You’d then apply them to the appropriate invoices. If your e-commerce software can’t process Payments (you don’t indicate that it can), you’ll either have to stop generating an invoice in advance and switch to using Sales Receipts or look for a more feature-filled e-commerce solution.

      Hope that helps.

      • Hi Chief Mechanic – thank you for your reply. Your advice helps in a sense that you confirmed to me that we can’t do what we would like/want to do. Thank you for all your help, and great website BTW. Vladimir.

  35. Hello,

    I am hoping you can help me and also hoping there is a simple solution. I am a new QB Pro 2010 user and here is my question. I have entered bills, paid bills but the vendor did not receive payment. I called the bank to verify if the checks have cleared and they have not which tells me that the payment never reached our vendor. How do I fix this in QB since I am assuming I will have to issue new checks for payment? Thank you!

    • The best approach is to void the bill payment check. That is, go to Vendor Center and select the vendor. Find the specific bill payment check that the vendor did not receive, open it, and from the Edit menu, void it. That will return all of the vendor bills paid with that check to an open status so you can issue a new check to pay them. Of course, you may want to issue a stop payment on the original check just in case it ever turns up.

      Voiding the bill payment check has a big advantage over deleting it because it preserves a record of what happened to that check number.

      Your question doesn’t relate to use of the undeposited funds account. It’s a good idea to make sure your question is on topic; otherwise, it might be deleted. If you have a question that is entirely new, just post it in our forum.

      Hope that helps.

  36. Chief, I am very impressed with your understanding of quickbooks and the undeposited fund account. I am hopeful that you can help me. I am using quickbooks pro 2010 for a non-profit organization. I entered all donations/contributions (which were cash) through “create sales receipts”. I then deposited the sales receipts using the “record deposits”. I selected them all, selected the bank account and clicked save and close. But, the balances from the donations/contributions still remain in the undeposited funds account and did not transfer to the specified bank account. How do I clear the undeposited funds account and have the money transfer to the specified bank account? Thanks so much for your help.

    • DP, the technique you described is exactly what you should do, so the fact that it is not working as expected will force you to dig a little deeper. First, run a verify on your QB file. If the file fails verification, run rebuild 2X in succession. Then, repeat your steps with a test transaction that you’ll later delete. Choose an odd and immaterial amount (such as .03) for the test transaction so that you can easily locate it for deletion. If it works, file corruption was the source of your problem. Second, if the file corruption test doesn’t prove helpful, check to see if duplicate sales receipts were entered. Sometimes users enter a sales receipt and expect the bank balance to increase. When it doesn’t increase, they enter a duplicate sales receipt in the erroneous belief that their first transaction wasn’t recorded. Third, use Customer Center to confirm that only a single sales receipt was recorded for each transaction. A sales receipt is a combination of a sale (similar to an invoice) and a customer payment. In other words, it’s a fully paid invoice at the same time the sale is created. Some use QB invoices to record the revenue, then enter a payment. If multiple users were recording transactions, another user could have opted to use the simpler sales receipt if a search for those transactions as sales receipts didn’t show that they had been recorded. If that happened, you’ll see 2 revenue transactions (an invoice and a sales receipt) and 1 payment (the payment for the invoice) in Customer Center.

      The bottom line is that the situation you are describing is either the result of a problem with your data file or transaction recording problems. We’ve never seen anything else that matches your description.

    • Hello Chief, I have a problem that is really starting to annoy me. We use QB Online. We create our invoices in qb, I download my transactions from the bank and start matching and coding. The problem that I am facing is that when I have matched an invoice to a deposit made, the A/R ledger is showing a substantial – bal and the matched invoices are not showing as being paid. I did realize that when I download from the bank the deposits are being made as “payments” instead of “deposits” which is part of the problem, but how do I correct the open A/R balance when a payments from clients have been received?

      • This is a common timing problem in QB whenever you grab online banking transactions before you record A/R payments. Ideally, you should record A/R payments first, turn them into deposits, and then grab online deposits. However, this can be difficult if you receive electronic payments that you only become aware of by using online banking. One alternative is to use your bank’s separate online banking feature to discover customer payments before attempting to download them using QB Online.

        You indicate that customer payments you download are being coded as payments instead of deposits. That’s the opposite of what I’d expect.

        To fix this, the easiest approach is to delete the deposit and re-enter the transaction correctly (ie, record a customer payment to relieve the A/R and turn that payment into a deposit).

        Hope that helps.

  37. I’ve spent 3+ hours trying to find a solution to this problem. I received a payment (several partials that belong to different invoices) and applied them to the correct invoices. I clicked on make deposits to select them to deposit. One of the payments is not listed in the make deposits box. I tried to delete it out of the accounts receivable register to redo it and it says you must delete it from the deposit first. But it’s not been deposited anywhere. When I click on it, it takes me back to the receive payment page and the correct invoice is checked. It’s also showing a check mark in the undeposited funds register, like it’s been reconciled. But I’ll be darned if I can find it anywhere. It’s driving me mad. For the longest time, I had it unapplied to the invoice and then it was showing me a credit for that amount. Once I checked the correct invoice in the payments page, the credit went away, but it won’t show in my make deposits box. I’m on day 2 after spending 3 hours yesterday trying to figure it out. Any suggestions?!

    • Carmen – Assuming your data file is not corrupt, a good way to tackle this problem is to use QB’s find feature to find the transaction that does not appear in the Make Deposits window based on its amount. Hopefully, the amount is relatively unique. QB is telling you that that payment has been deposited, so it’s important to find out where it went as a first step in fixing the problem. Did you change your undeposited funds preference between the times you recorded the multiple partial payments? If so, some might be in your Undeposited Funds account, while others got automatically deposited in a bank account. Do you have a lot of entries in your Make Deposit window? QB can group items in the undeposited funds account by type, so in a long list, you may not see the items close together if there are items of different types. If you’ve done everything the right way and things still aren’t working out, your data file may have corruption. To check for that, run the QB Verify utility. If problems are found, run the Rebuild utility several times in succession. Then, recreate the steps with your customer payments. Lastly, if it is still not working, make sure you are on the latest release for your version of QB. The Make Deposits function with partial payments is a frequently used feature of QB, and it works reliably. If it isn’t working for you, the problem is likely in 1 of 4 areas: 1) your QB preferences (you changed your undeposited account preference), 2) data file corruption, or 3) not running the latest release. Hope that helps.

  38. After putting in all the customer payment and trying to make them into deposits, they are still not showing up on the Job detail. And because they are not showing up on the detail, i have a negative amount because i have spend more than i received, which i havent. ALso, it says that there is no revenue and that is where i need to see the money that i have made, how do i do that?

    Please help! Thanks!

    • Taylor – From your description, you seem to be missing an item associated with a revenue account, or you didn’t use that item to invoice your customer. It’s not the payment that triggers revenue for a job; instead, revenue starts with the invoice, even for a cash basis business. Check your item list for an item that is connected to a revenue account. Next, for a job showing negative results (or no revenue), check to be sure you generated an invoice using that item. Once you get revenue items on a job report, you should get accurate results. Hope that helps.

  39. Lindsay Wilkinson says:

    There is probably a really simple solution to this but I can’t seem to find it!

    I’m exporting transactions from from my online banking so deposits are automatically posted to the check register that way (provided I “approve” them when receiving what’s imported).

    BUT if I’m receiving my payments from customers in order to zero out the invoice, that automatically moves the payment funds into deposited funds. So then I have the payment in 2 places, the check register and undeposited
    funds. For fun, I deleted the deposit I imported in the check register and made the deposit from undeposited funds and that seems to clear it that way, but that doesn’t make sense to me that you would do it that way.

    Maybe I just need to not import the deposits from vendors that need to be applied to invoices? Any info on how to clear the undeposited funds account to $0 in this situation would be great.

    Thank you!

    Lindsay W.

    • Lindsay – It comes down to timing and entry accuracy. Most online banking functions will first attempt to match a deposit if you’ve already recorded it in QB. Therefore, you want to make sure that you record your customer payments and combine them into a deposit BEFORE you grab your online banking transactions. If the deposit date and amount match, your online banking function will match the deposit to the one you’ve already recorded. If you grab online banking transactions first, the deposit won’t be in your register, so it will be added. Then, you’ll have to delete the deposit and make it manually in QB, which is slightly more work because you end up importing a deposit and then deleting it. The important lesson is to make your books and records as accurate as possible BEFORE using online banking functions. If you don’t and instead rely on online banking to enter transactions, you’ll end up re-doing them to make your accounting records accurate.

  40. DensieK says:

    I am new at QB Pro 2011. We use QB POS 2010, QB Pro 2011 and Intuit POS Merchant Services. When we process the End of Day merchant services transactions, they go into undeposited funds, right? Then I just need to maybe once a week deposit those funds into the bank register? Or what is the process?

    • They’ll go to undeposited funds if that is how you’ve set up POS, which is the recommended approach. As for how frequently you make deposits from undeposited funds, you can do that work one time per week, but you should group deposit items to match the deposits that appear on your bank statement; otherwise, bank reconciliations will become difficult.

  41. Jill Erber says:

    Hi, Chief.

    I think you might be the first person I’ve come across that has such a deep understanding of this stuff. Here is something that has confounded me for as long as I can remember. I’m using Quickbooks POS to process sales in my shop. Sales receipts get transferred to Quickbooks Pro and all credit card payments for each day are placed in Undeposited Funds. The problem is that different cards take different amounts of time to “hit” my bank. So, if I do $5000 in sales on Monday, then on Wednesday, $3500 might get deposited and then on Thursday, the remaining $1500 will get deposited. When using the “Make Deposits” window, I can’t alter the amount of the deposit. In other words, it will only let me enter the $5000 sales item, but that doesn’t reflect the actual deposit into the bank.

    As an alternative, I started using the Transfer Funds screen and I transfer the actual deposit amount from Undeposited Funds to my bank account when the money hits. This results in more difficult tracking and it also means that when I do go into the “Make Deposits” window, there are tons of “Receipts” and “Transfers” listed there.

    Can you help? I would be eternally grateful!

    Thank you,

    • Jill, you don’t specify which QB or POS versions you’re using, so the following general tip might not apply to you, since it’s based on relatively recent versions. With that caveat, it should be an easy problem to fix. POS supports 3 posting methods to QB: summarized, detailed, and detailed only for A/R transactions. From your description, it sounds like you are using the summarized posting method. You’ve identified a big weakness in that posting method, namely that it wreaks havoc with making bank deposits and reconciling your bank account. To fix that, you’ll need to switch to the detailed posting method. You can do that on the POS Edit menu by visiting Company->Preferences. One downside to using a detailed posting method is that you are putting a lot of data in your QB Pro data file. Since QB Pro has some data limits, for a busy store with many transactions, especially small dollar transactions, you may find the amount of data transferred to be overwhelming. You might want to investigate Intuit’s merchant services, which should allow summary posting with tracking for credit card batches. That way, you’d keep your ability to make deposits easily without having to transfer detailed data.

      Hope that helps.

  42. Hi There Chief,

    Hoping you can help me out.

    I run a small business and create all of my invoices in Quickbooks.
    Once I receive a check from a customer, I enter this into the Receive Payments area and I group with other undeposited funds until the day I make a run to the bank, at which point I record deposits in the Record Deposit screen. If all goes well – Quickbooks will automatically make a match to the deposit I make at the bank and the recorded deposits once I download my bank transactions correct?

    Here’s the part where I get confused.
    Many of my customers pay by credit card, all of my credit card transactions are automatically deposited into my bank account MINUS the merchant account fee and often times, if I run multiple credit card transactions on the same day the merchant account will deposit multiple deposits as one lump sum (minus merchant fees of course)

    Once the credit card transaction hits my bank account, I’m able to back track and figure out exactly how much the merchant has taken out of each transaction, the problem is I don’t know how or where to enter these in order for it to reconcile correctly. Is there a way to do a SPLIT in either the Receive Payment screen or the Record Deposits screen?

    Any help would be much appreciated!!!!

    • When you payments made by different payment methods, it’s important to have your payment methods set up in QB. See the Lists->Customer & Vendor Profile Lists->Payment Methods List for this. That will help you to sort your list of payments on the Make Deposits window.

      For credit cards, choose the payments by credit card that make up a deposit. Then, enter the merchant fees and discounts as a negative amount on the Make Deposits window, along with the items you’ve chosen. You’d normally record these to an 1 or more expense accounts for your merchant fees. This method is used any time there is a deduction from a gross deposit amount to arrive at the net deposit.

  43. TONI CAMPBELL says:

    Hi, I just took over a new position. The previous ‘bookkeeper’ left all the Point of sale deposits in the undeposited account and never did any reconciliations. I managed to move from Undeposited to our checking account in one lump sum as of today date. however when I try to do June’s reconciliation I don’t have any POS deposits for June as they are in the lump sum of December. Is there a way to allocate this lump sum to each month ? I hope this makes sense as I am about to lose this job as the CPA has quit also!
    Thanks so much

    • Toni – You’ve got a big task. We’ve confronted this same situation many times, and there are 2 general approaches. The first approach we’ll call “Start at the beginning and slog your way through it”; the second we’ll call “Fast forward to the present.” For the first approach, we’d delete whatever you did to move amounts from Undeposited Funds to a bank account. Then, we’d start at the last month the bank account was reconciled and proceed to reconcile month by month. For the deposits, we’d use the Make Deposits function to group the amounts in Undeposited Funds so they match exactly what is on the bank statement. This can be a slow process, but as you move forward month by month, it gets faster. In our view this is the right approach, and in the long run, it’s the cheapest. However, it takes time and is slow to produce results, especially if you have a business owner that wants everything reconciled in the shortest amount of time.

      That’s where the “Fast forward to the present” method comes in. Using this method, you pick either the latest month for which you have a bank statement (or the 1 just before that month), and using Make Deposits you make a single deposit for every amount in the Undeposited Funds account on or before the last day of the statement you choose. You then check off every transaction in your bank register on or before that ending statement date in the reconciliation process. If there is a reconciliation difference, you record a general journal entry to an account based on whether your bank balance is too low or too high. If your QB bank account balance is too high relative to your bank statement, you’ve probably missed some expenses, so your GJE would be a credit to the bank account and a debit to an expense account. If your QB bank account balance is too low, you’ve missed some cash receipts, so your GJE would be a debit to the bank account and a credit to a sales (revenue) account. Ideally, before adopting this method, you’d verify that an A/R & A/P report as of the bank statement date is accurate.

      The problem with the “Fast forward to the present” approach is the GJE you enter can be a material amount, and there’s no way to explain this reconciliation adjustment other than in general terms. If your boss or client is not going to accept this reconciliation adjustment, adopting this method is not a good approach. Also, there’s no way to know how large the adjustment will be or whether it will add to net income or reduce it until you try it. If it adds to net income, your boss or client might then complain about having to pay taxes on an adjustment that he or she doesn’t fully understand. If it is a deduction to net income, the tax authorities might question it. Of course, the adjustment might end up being a very small amount, at which point these issues become less important, but there’s no way to know that before adopting the process. Your boss or client has to be comfortable with spending the time trying this method, realizing it might have to be abandoned. You can attempt a reconciliation this way and see how large the adjustment might be; if your boss is unhappy with it, you can undo the reconciliation and adopt our recommended method.

      What you have done is similar to the “Fast forward to the present” method, except that you’re trying to reconcile June when you’ve recorded a deposit in December. If you want to reconcile June, you can undo what you did to create 1 large deposit in December, then use the Make Deposits function to move all funds received on or before 6/30/11 from Undeposited Funds to the bank account, and follow along with the second method we described above. You didn’t describe how you moved funds from the Undeposited Funds account to the bank account, but the Make Deposits function is the easiest and most straightforward.

      Hopefully, you don’t lose your job. You might want to point out to your boss or client that with every cleanup project, there is a learning curve. Replacing you with someone else won’t change that. We know a bit about QB, but we’d face the exact same issues you face in tackling a cleanup like this. The lesson for a business owner is not to blame the bookkeeper or accountant, but to make sure reconciliations are done on a regular basis. When they are left undone over many months, they take much longer to do than had they been done when the statements and transactions were fresh.

      Hope that helps.

  44. Hey Chief, you seem like the most knowledgeable person in the realm of undeposited funds account I’ve come across. SO, here is my issue, I am entering an invoice – Invoice hits A/R. I receive the payment to Undeposited Funds. And make the deposit.
    Now, customer balance = 0
    However, when I sit down to do the Bank Reconciliation my bank balance first of all is negative and the Deposits versus Credits sections is off by right around the total of Undeposited funds.
    Also, in the customer view I have an invoice and a payment but not a “deposit” is that an issue?

    Also, I am doing this for a friend who had previously been doing splits on deposits that were downloaded from the bank (i.e. matched). I had to delete a majority of these to do the Undeposited Funds method. Now we cannot re-download those transactions as some were quite old.

    So I am wondering a) am I not pushing through the undeposited funds properly. b) Does the deposit have to be matched in order for the funds to be recognized?


    • HenneT, Thanks for the compliments. Let’s clarify a few things.

      You enter an invoice. Invoice hits A/R. You then receive the payment, which we’ll assume is payment in full and there are no other outstanding invoices. Payment goes to the undeposited funds account, and at THAT point your customer balance is 0. The deposit function has nothing to do with the customer balance. The deposit function is merely moving funds from the undeposited funds account to a bank account. Generally speaking, deposits won’t appear in Customer Center, so that is not an issue.

      From your description, it sounds like your deposit function is not putting funds in the right bank account. You can check the default “deposit to” account on the My Preferences tab of Preferences->Checking.

      Here’s what I suggest to track down the problem. You’ll open several windows on the QB screen so you can monitor several accounts at the same time. First, open and print a balance sheet as of today. Note the balance in undeposited funds and the bank account. Open a register for both the bank account and the undeposited funds account. Next, perform a deposit and be sure to confirm the bank account. I am assuming that the date of the deposit is today or earlier, otherwise it won’t appear on the balance sheet. When you open the deposit function, you pick 1 or more customer payments in the undeposited funds account. If there are funds in the undeposited funds account, QB will automatically open a window showing those payments. Put a check mark next to each payment you want to deposit, and be sure to save the deposit. At this point, your bank balance should have gone up by the amount of the deposit and the undeposited funds account should have gone down by the same amount. You should see entries on both account registers, and once you refresh the balance sheet, the account balances should be correct. If all of that works as expected, you undeposited funds account is functioning properly. If not, you can try rebuilding your data file. If you find that funds have gone to wrong bank account, you can edit those deposits and fix your bank reconciliations.

      Using online banking introduces another complication, since most online banking programs don’t handle the undeposited funds account well. As long as you make sure you enter your deposits BEFORE downloading transactions from online banking, you should be fine, because online banking will simply see the deposit and match it. However, if you download a deposit that you have not already recorded, online banking will put that deposit in the bank account, not the undeposited funds account. If that happens, the only solution is to make the deposit as you normally would using the undeposited funds account and delete the duplicate deposit recorded by online banking.

      QB doesn’t support splitting a deposit, since a deposit is made to a single bank account. As a result, you have 2 options. The first is to gather up 1 set of payments from the undeposited funds account and put them in bank account A and another set in bank account B; this is time-consuming and requires attention to detail. The second and simpler method is to make a deposit to bank account A and then a transfer from bank account A to bank account B in the amount you want to put in bank account B. To record the transfer, you can either use the Banking->Transfer Funds function, a general journal entry, or write a check from 1 bank account and use the other bank account as the offset.

      Hope that helps.

      • Thanks Chief, I will perform all of that when I get more than a moment.

        I just wanted to add the undeposited funds is zero and the A/R is correct with a total for service not yet performed. The bank accounts have never been reconciled and that was what I was initially trying to do when when we stumbled into these problems.

        In the reconciliation process I checked off the deposits and their respective checks. To possibly shed some more light on the scenario, we encountered an issue of if we checked all “deposits” and “payments”/”Debits” and “Credits and we have a negative bank account balance of approximately what we have at one point or another hit undeposited funds with.

        I’m trying to make as much sense as possible so I apologize if I’m just complicating the issue but figured that little bit of clarification might give you an ah-ha moment. Anyhow, I am greatly appreciative of your help. Thanks!

        • If customer payments were put in undeposited funds and that account has a zero balance, then deposits were made. That means you should focus on where the funds were deposited. When you open the undeposited funds account register, you should be able to see the bank account to which deposits were made. My suspicion is that they were not made to the proper bank account, which is why your discrepancy roughly matches the total of deposits made. You can also get a good clue about where the funds ended up by looking at the balance sheet.

          For firms that haven’t done a bank reconciliation in a long time, Intuit sometimes recommends that you treat the entire unreconciled period as 1 bank statement. That can work if the overall reconciliation discrepancy is very small and a client can’t afford to pay for the month-to-month reconciliations. However, the best approach is to reconcile 1 statement at a time. In your case, you are best served by trying to reconcile that first statement because that will shed a lot of light on the problems you’ll face on other statements. Even if you adopt the approach of reconciling all statement periods as a group, you’ll have an understanding of what types of transactions might not have been recorded. For example, some firms that recorded all checks and deposits might miss bank fees or issues where a customer payment was returned unpaid. Knowing that can help you explain your overall discrepancy.

          Let us know how it turns out.

  45. I use the 1200 undeposited funds account – but there are times when the amount is still in this account even though I have made the deposits – what am i doing wrong?

    • It’s impossible to say exactly what is going on without digging deeper, but here are some things to check. Are you recording multiple payments? That would produce multiple entries in the undeposited funds account. You can check that by looking at a customer’s record in for a payment you are sure you have deposited. Does your undeposited funds account show a series of increases and decreases, where payments are increases and deposits are decreases? You can investigate that by looking at the account register. Does your file have data damage? Sometimes, linked transactions can appear as duplicates if your file is damaged. You can run the Verify utility to see if you have damage, and the Rebuild utility if your file is damaged. Let us know what you uncover.

  46. I ran across your blog while searching for the answer to this question: How do I set up “Use Undeposited Funds Account as a default” in QuickBooks online? I have always used the Undeposited Funds account as you outline above, but I recently switched to QuickBooks online and I can’t find the option (nor can I find the answer in the Help link). Any insight? (Thanks for providing a great blog on QB use, by the way!)

    • Angela – We don’t get a lot of questions about QB Online Edition, so it’s not something we focus on. I don’t believe there is a setting in the online edition to set this as a preference as exists in the desktop products. However, many data entry screens have the ability to save the selections as default. I’d look on the data entry screen to record a customer payment to see if your selection of bank account can be saved as a default, and if it can, that will effectively accomplish the same thing. Hope that helps.

  47. Hi,

    I created an export file to Quickbooks and when I look at Undeposited Funds, I have an account with a “*” beside it and another account. There are only a few accounts in the account marked with a star, but there are at least 50 more that were downloaded that are missing. Oddly enough, we tried the export using a Dummy Company to see what it would look like and there is only one Undeposited Funds account with all of the accounts in it. Do I just delete one of the accounts to solve the problem?

    Thank you so much in advance!

    • For an understanding of accounts where the account name is preceded by an “*”, see our article on special account types. It’s difficult to provide a good recommendation without more info. Generally speaking, accounts weren’t exported and they should have been based on your export settings, you might need to resort lists or run the rebuild utility. The ability to delete an account is only there if the account has no transactions (among other things), so if there is a stray account with no transactions, deleting it won’t harm anything. On the other hand, if you delete an account that is a special account type, it will simply re-appear the next time you use a feature that requires that special account type. In that case, find the account whose name matches the one with an “*” and rename it to something slightly different. Then, rename the special account type (the one with the “*”) to remove the “*”. That way, the feature that requires the special account type will work without adding a new account.

      Since QB doesn’t allow a typical user to see what are the accounts mapped to a special account type, I recommend you record this info in the account description. You can figure out which account is mapped to a special account type by observing how that account behaves. For example, if you have the Undeposited Funds preference enabled, a customer payment will first go in the account mapped to that special account type.

      Hope that helps.

  48. I’m using QB Pro 2008. I am trying to use Sales Receipts to enter daily sales and payments. I have all the needed Payment Items set up; some are set to deposit directly to my bank account (VISA/MC), some are set up to deposit to undeposited funds account (AMEX, because my merchant processor groups my AMEX payments across all my locations whereas my VISA/MC are deposited separately by location).

    I cannot get the transaction to post to the undeposited funds account at all using the Sales Receipts transaction. It doesn’t matter if I have it as a default under Company preferences or not. Even if I select the Undeposited Funds accout directly at the bottom of the Sales Receipt transaction it is still posting to my bank account.

    Alternatly, I CAN get payments to undeposited funds using the Receive Payments transaction.

    Further confusing me, I have the same set up on a separate machine/separate company file and it works just fine. The only difference is I’m using QB Pro 2009 on the separate machine. The situation here is I’m consulting for this company.

    Can you help me diagnose this problem?



    • Ok, let’s be specific about terms. When you say you have your “Payment Items” set up, are you referring to Payment Methods as shown below? If so, where are you specifying the deposit to account for each payment? That’s not a setting for Payment Methods.

      When you see the Deposit To account setting at the bottom of the Enter Sales Receipt window, that means you have the Undeposited Funds account preference turned off.

      If you have the preference turned on, and you record a Sales Receipt, into what account do the proceeds end up?

      Other things to check: verify the company file and rebuild it if necessary. Before doing that, you can also re-sort your lists.

      Clarify how you are specifying the Deposit To account by payment method and we’ll try to help further.

      • I have Items of type = Payment set up. So on the Sales Receipt (for which I’m setting up memorized transactions for each of my locations), using these Items results in a negative number on the Receipt and the funds should go to either the bank account or the undeposited funds account. I am not doing anything with the Payment Methods menu selection you show in the screen shot (in fact, I’m not even sure what this menu selection is for…).

        When you see the Deposit To account setting at the bottom of the Enter Sales Receipt window, that means you have the Undeposited Funds account preference turned off.

        Correct. In the course of trying to solve my problem I have turned this preference on/off, gone through the steps of using my Sales Receipt, and tried to get funds put into my Undeposited Funds account…to no avail.

        If you have the preference turned on, and you record a Sales Receipt, into what account do the proceeds end up?

        My bank account. This is true even if the Item(s) = Payment are set up with the “Group with other undeposited funds” selection. An interesting question is which setting takes precedence…the Company Preference selection or the selection at the Item level?

        Other things to check: verify the company file and rebuild it if necessary. Before doing that, you can also re-sort your lists.

        I can verify and rebuild. I’m not sure what you mean by “re-sort my lists”. What lists, how do I resort and what will this accomplish?

        Clarify how you are specifying the Deposit To account by payment method and we’ll try to help further.

        I’ll try to clarify here:

        I want to to specify the Deposit To account at the Item=Payment level. I have 5 ways customers pay me (Cash/Check, AMEX, Discover, VISA/MC Swiped, VISA/MC Keyed). I have 4 locations. I want to use the Customer–> Enter Sales Receipt transaction to record daily sales and payments separately for each location. My merchant processor groups all VISA/MC keyed and VISA/MC swiped payments into one deposit for each location daily. For AMEX payments, however, my merchant processor groups all payments regardless of location and makes one deposit daily. Additionally, it is much easier for me to go to the bank 1X/week for each location. So for the daily Sales Receipt transaction I am doing it 4X per day (1X for each location), and want the Cash/Check and AMEX payments to go to the Undeposited Funds account so I can Make Deposit and group the AMEX and Cash/Check together appropriately. The other payments, however, I want to go directly to my bank account. Thus, at the Item=Payment level I have the appropriate selection made.

        So in my mind the Company Preference should be off and the funds put into the correct account (bank or undeposited funds) based on the selection I’ve made at the Item level.

        Yet when I do my Sales Receipt, all payments are going into my bank account…I can’t get anything to go to undeposited funds, regardless of system selection.

        I have used your helpful information above to confirm that my Undeposited Funds in my chart of accounts is in fact my Special Account Type; I did this by doing a Customer–>Receive Payments transaction and those funds did go to the Undeposited funds account.

        Hopefully that clarifies what I’m trying to accomplish. Thanks in advance for your help. Great forum.


        • I now understand what you’re doing and why it’s not working.

          First, the Items having a type of Payment, or Payment Items, that you’ve added to the Item list are intended for Invoices or Statements, not for Sales Receipts. A Sales Receipt is similar to a combination of a Invoice plus a payment in full – except that you don’t enter the payment itself. You can configure the Sales Receipt form to prompt you to enter payment information, such as the Payment Method (from the list in my earlier post) or a check number. But the amount of the payment is automatically entered as the total of the Sales Receipt, so you don’t enter this on a Sales Receipt.

          Payment Items are intended to record a partial payment when you are creating the invoice, which means in effect you received the payment before the time of sale. If you receive full payment at the time of sale, you can use a Sales Receipt or you can use an Invoice and enter a separate payment. If you receive either full or partial payment at or after the sale, you should use an Invoice with a separate payment.

          On resorting lists, see our article on how to resort lists. Our article lists a range of symptoms that indicate you have a problem with your lists, but it’s a common troubleshooting technique. In your case, it’s probably not necessary, since the behavior you observed is due to a mis-use of Payment Items.

          Payment Methods are simply a way to specify the type of payment. If you look on the Receive Payments window, you’ll see a pull-down field to enter a Payment Method, and this pull-down is populated by data you enter.

          With that in mind and what you are trying to accomplish, let me suggest this:

          1. Create Payment Methods of MCV Location 1, MCV Location 2, MCV Location 3, and MCV Location 4
          2. Create a Payment Method of Amex and Check plus whatever others you require (e. g., Cash)
          3. Use the Undeposited Funds account so all payments go to that account
          4. Use Sales Receipts to enter your sales grouped by payment type (provided they are paid in full) – make sure the Payment Method is specified on your Sales Receipt form
          5. Use Banking->Make Deposits to make your deposit as frequently as your business needs dictate, recognizing that payments will be sorted by Payment Method, so all of your MasterCard/Visa payments for Location 1 will be easily identified and grouped

          That should solve your problem. If it doesn’t, let us know what doesn’t work.

  49. Thanks for sharing this informaiton! This issue has been confusing me for months. I don’t manually enter payments. I just take my checks to the bank the day I receive them, then download the transactions from the ‘Online Banking Center’. As I selected the invoices that apply to a specific deposit, QB kept choosing the ‘Undeposited Funds’ account. I just returned from the bank to deposit the checks! Yell So your article has helped me to understand that I can rename this account to ‘Payments Received’. I say that in the online help but thye didn’t explain what was happening as well as you did.

    But I still have a problem in the ‘Online Banking Center’ now that I’ve renamed my account. When I select invoices to associate them with a deposit, QB still sets the ‘From Account’ field value to ‘Undeposited Funds’. This is greyed out and I can’t change it. When I click I get an dialog saying ‘GetQBAccountSpecialType’ – ‘An unknown QuickBooks account was used.’ My only option is to click . When I go look at the transaction on the register, the customer and the reports QB has correctly used the ‘Payments Received’ name so I assume all is well. But I’m concerned about the warning in the banking center. At the very least, I’m annoyed that I have to click OK on an unnecesary dialog for every single check I deposit.

    Any ideas?

    PS: I’m on QB Pro 2009 R11


    • Several things…

      First, check your preferences as outlined in this article and make sure you’re set to use the Undeposited Funds account. You really can’t skip the step accounting step of manually entering checks. You can take the checks to the bank as your first activity, but the next time you’re working in QuickBooks and before you use Online Banking, go to the Customers->Receive Payments menu selection, and record the customer payments. That’s how you match payments with Invoices. Once you’ve completed that step, go to Banking->Make Deposits and turn those individual customer payments into the deposit you just made. The deposit total and date should match your depsit slip. Verify that the Deposit To account in the upper left of the screen matches the Bank account to which you made the deposit. Only after doing all of that should you use Online Banking to download that deposit.

      Second, you’ve touched on an area that is important to the functioning on QuickBooks but is inaccessible to a typical user: Special Account Types. QuickBooks maintains about 13 different Special Account Types which aren’t visible from within QuickBooks. Undeposited Funds is one of the Special Account Types. When you choose to use the Undeposited Funds account as the default deposit to account, QuickBooks uses the account that is assigned the Special Account Type of Undeposited Funds – even if that account is named something different.

      You said in your post that you renamed the account to Payments Received. That is acceptable if you did this after enabling the Undeposited Funds preference. If you renamed a generic account (not the Special Account Type) originally named Undeposited Funds to Payments Received and then enabled the preference, QuickBooks will add a new account that is marked as the Special Account Type. You can check for other accounts with the Undeposited Funds name in your chart of accounts. If you find one, it’s possible that this is the account that has a Special Account Type of Undeposited Funds. Of course, you can figure out which account is your functioning Undeposited Funds account (the one with the Special Account Type) by receiving a customer payment and finding out in which account those funds ended up. If you had an account named Undeposited Funds before you enabled the preference, QuickBooks would add a new account with the same name preceded with an *, as in *Undeposited Funds – and this would be the account with the Special Account Type of Undeposited Funds.

      With all that said, it’s hard to determine very much from the message you reported without more information. What’s going on is probably tied to Special Account Types. Therefore, verify which of your accounts has a Special Account Type of Undeposited Funds by receiving a customer payment and tracking where it ends up. If you have other accounts that you thought were Undeposited Funds but now realize are not, you can make them inactive or delete them. Receive future customer payments and make deposits as described above. Then, try Online Banking and see if the process works more smoothly. If not, post back and we’ll try to help.