QuickBooks Undeposited Funds Won't Clear: How to Fix It

Quick Fix: Go to Banking → Make Deposits, select the payments sitting in Undeposited Funds, and create a bank deposit. If they still won't clear, check that the deposit total matches what actually hit your bank account.

What Are Undeposited Funds?

Undeposited Funds is QuickBooks' way of handling the gap between when you receive payments and when you actually deposit them at the bank. Think of it as a virtual "cash drawer" where payments sit until you bundle them into a bank deposit.

The Problem: Many users don't understand this account, so payments pile up in Undeposited Funds forever — causing reconciliation headaches and inflated customer payment reports.

Why Undeposited Funds Won't Clear

Common causes include:

1. Payments never deposited — You recorded customer payments but never created the bank deposit in QuickBooks
2. Partial deposits — You deposited some payments but left others in Undeposited Funds
3. Amount mismatches — Your QuickBooks deposit doesn't match what actually hit the bank
4. Multiple payments combined — You deposited 5 checks together but created 5 separate deposits in QuickBooks
5. Bank feed conflicts — Your deposit downloaded via bank feeds, creating a duplicate

How to Clear Undeposited Funds

Step 1: Find What's Stuck

1. QuickBooks Online: Go to Accounting → Chart of Accounts → Undeposited Funds → View Register
2. QuickBooks Desktop: Go to Lists → Chart of Accounts → Double-click Undeposited Funds
3. Review all payments sitting there and note the amounts and dates

Step 2: Create the Missing Deposit

1. Go to Banking → Make Deposits (Desktop) or + New → Bank Deposit (Online)
2. Check off the payments that were physically deposited together
3. Verify the total matches what actually hit your bank account
4. Save the deposit — this moves payments from Undeposited Funds to your checking account

Step 3: Handle Partial Deposits

If you only deposited some of the payments:

1. Only select the ones you actually deposited in Step 2
2. Leave the others in Undeposited Funds until they're physically deposited
3. Create separate deposits as you make them at the bank

Step 4: Fix Amount Mismatches

If your deposit total doesn't match the bank:

1. Check for cash back — did you take some cash from the deposit?
2. Look for bank fees — some banks charge deposit fees
3. Verify check amounts — ensure payments were recorded at correct amounts
4. Add cash back or fees as separate lines in the deposit

Common Scenarios and Solutions

Scenario 1: Everything in One Lump

Problem: 5 customer payments totaling $2,847 sitting in Undeposited Funds for weeks

Solution:

1. Make Deposits → select all 5 payments → Save
2. This creates one $2,847 deposit that should match your bank

Scenario 2: Bank Shows Different Amount

Problem: QuickBooks shows $1,200 deposit, bank shows $1,150

Solution:

1. Edit the deposit and look for a $50 discrepancy
2. Likely a bank fee or one payment was $50 less than recorded
3. Add a "Bank Service Charge" line for $50 to balance

Scenario 3: Months of Undeposited Funds

Problem: Dozens of payments from months ago never deposited

Solution:

1. Start with bank statements — see what actually deposited and when
2. Group payments by deposit date — don't guess, follow the bank records
3. Create deposits retroactively to match actual bank deposits

Prevention: Use Undeposited Funds Correctly

When to Use Undeposited Funds

✅ Use it when:

• You receive multiple payments and deposit them together
• You take cash from the register to make deposits
• You want to track payments separately from deposits

❌ Skip it when:

• Each payment gets deposited individually
• You want to simplify your process
• You use a merchant processor that deposits daily

Turn Off Undeposited Funds (Simplified Approach)

1. QuickBooks Desktop: Edit → Preferences → Payments → Company Preferences → Uncheck "Use Undeposited Funds"
2. QuickBooks Online: Gear → Account and Settings → Advanced → Uncheck "Use Undeposited Funds"

Note: New payments will go directly to your checking account. You'll still need to clear existing Undeposited Funds manually.

Reconciliation Impact

Undeposited Funds problems affect bank reconciliation because:

• Payments in Undeposited Funds don't show up in your checking account register
• Your checking account looks short by the amount sitting in Undeposited Funds
• Customer reports show payments received even though they're not in your bank

After clearing Undeposited Funds, re-reconcile any affected months.

Related Issues

• Reconciliation Discrepancy — Undeposited Funds are a common cause
• Duplicate Transactions — Can occur when fixing Undeposited Funds incorrectly
• Sync Error — Bank feed issues affecting deposits

---

Tired of fighting QuickBooks errors? Accounting Ketchup catches up and cleans up your books in 3–7 days. From $69/month. Get your price →