QuickBooks' holding account that groups payments into bank-matching deposits.
Undeposited Funds is QuickBooks®' holding account (now labeled 'Payments to deposit') for customer payments received but not yet deposited. Its job: let several payments be grouped into one recorded deposit that matches the single deposit on the bank statement.
Without it, three checks deposited together show as three book entries against one bank line — reconciliation friction forever. The classic failure: payments go into Undeposited Funds, but deposits get entered separately as new income. Revenue double-counts, and the holding account balloons with phantom payments. A large, stale Undeposited Funds balance is one of the first things a cleanup bookkeeper checks.
Monday's mail brings checks for $500, $750, and $250. Each payment is received into Undeposited Funds against its invoice; one $1,500 deposit is then recorded — exactly what the bank will show. Reconciliation matches in seconds.
Bank Reconciliation · Accounts Receivable (A/R) · Chart of Accounts — or browse the full plain-English glossary.
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