What is Undeposited Funds in QuickBooks Online, and how do you clear it?
Why the account exists
Banks often show several customer payments as one deposit. Say on Monday you receive a $95 check from one customer and a $180 check from another, and take both to the bank together. The bank statement shows a single $275 deposit.
If each payment went straight to Checking, QuickBooks would show $95 and $180, and neither would match the bank's $275. So the payments wait in Payments to deposit, like a cash drawer, until you record the bank deposit that combines them.
How to record the bank deposit
- When you receive a payment or record a sales receipt, set Deposit to to Payments to deposit (or Undeposited Funds).
- When the money goes to the bank, select + Create, then Bank deposit.
- In Account, choose the bank account the money went into.
- Tick each payment that was part of this deposit.
- Check that the total matches the deposit slip or the deposit on the bank statement, to the cent.
- Select Save and close.
- When the bank feed downloads the $275 deposit, match it to this bank deposit. Don't categorize it as income: the income was already recorded by the invoices or sales receipts.
If you use QuickBooks Payments, Intuit says these payments are grouped into deposits for you, so you don't need to do this by hand.
Why the balance is stuck, and what to check
| What you see | Likely cause | What to do |
|---|---|---|
| Old payments sitting in Payments to deposit for months | The bank deposit was never recorded. Often the deposit was categorized as income in the bank feed instead | Undo that categorized deposit, record the bank deposit with the payments, and match it. If the period is already closed, ask your accountant first |
| A payment you expect isn't in the Bank deposit window | It was saved to another account, such as Checking | Open the payment and change Deposit to back to Payments to deposit |
| A payment isn't in the Bank deposit window | It's already part of another deposit | Open that deposit and untick it, if it was added by mistake |
| Income looks too high | Payments were recorded on invoices and again as income in the bank feed | Find the bank-feed income lines and match them to the payments instead |
Common questions
Is Payments to deposit the same as Undeposited Funds?
Yes. An Intuit moderator explained in November 2025 that Payments to deposit is the default name QuickBooks Online uses for this holding account. It works the same way, and you can rename it.
Do I have to use Undeposited Funds?
No. Intuit says you can skip it, for example if you deposit each payment on its own. It's useful whenever the bank shows several payments as one deposit.
Should Payments to deposit have a balance at month-end?
Only for payments you've received but not yet taken to the bank, such as checks from the last day of the month. Anything older usually means a deposit wasn't recorded.
Can I clear Undeposited Funds with a journal entry?
Avoid it. A journal entry hides the real problem, which is usually income counted twice. Find the payments and the deposits they belong to, and ask your accountant before changing a closed period.
Related guides
Sources
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