Handling Bulk Deposits: Using the Undeposited Funds Account
Overview
If you combine multiple client payments into a single bank deposit (a bulk deposit), use the Undeposited Funds account to keep your books aligned.
The Undeposited Funds account is a temporary holding place for payments until you deposit them. This ensures your accounting shows the same lump-sum deposits your bank does, making reconciliation simple and accurate.
⚠️ Important: The Undeposited Funds account is not a real bank account — it’s a tracking tool for grouping payments before they hit your bank.
Why It Matters
Banks vs. books mismatch: Banks show one deposit; your accounting shows multiple payments. Without Undeposited Funds, reconciliation fails.
Cleaner records: Grouping payments first means your books match your bank feed exactly.
Saves time: No more puzzling over deposits during reconciliation.
When to Use
Use Undeposited Funds if you:
Collect checks or cash during the week and deposit them together
Combine multiple payments into one bank deposit
Want faster, cleaner reconciliation of bulk deposits
What’s Your Situation?
Multiple Payments in Single Deposit (Bulk Deposit)
Sarah receives a $2,000 check Monday, $1,500 cash Wednesday, and a $3,000 check Thursday. On Friday she deposits all $6,500 at once.
→ Record each payment to Undeposited Funds. When the $6,500 shows in the bank feed, transfer it from Undeposited Funds.
Forgot to Use Undeposited Funds Account
Lisa deposits $5,200 from four clients at once. Her bank shows one $5,200 deposit, but her books show four separate payments.
→ Use Split Deposit to break the single bank transaction into four invoice payments.
Reconciliation Issues
Mike’s books show three $1,000 payments, but his bank shows one $3,000 deposit. He can’t reconcile.
→ Use Split Deposit to break the single bank transaction into three invoice payments.
How to Handle Bulk Deposits
✅ Method 1 (Recommended): Use the Undeposited Funds Account (use before you deposit at bank)
Best for: Businesses that regularly combine multiple payments into a single bank deposit and want seamless reconciliation. Record each payment to Undeposited Funds → Deposit → Match to bank feed.
Go to Invoices.
For each invoice payment:
Click the three dots → Apply Payment → Create Transaction.
In the payment details, set Deposit To = Undeposited Funds.
Deposit the checks or cash together at your bank.
When the combined deposit appears in your bank feed:
Categorize it as a Transfer from Undeposited Funds.
Result: Your books show one combined deposit that perfectly matches the lump-sum deposit in your bank.
Example Workflow:
Monday: Client A pays $1,000 → record to Undeposited Funds.
Wednesday: Client B pays $1,500 → record to Undeposited Funds.
Friday: Client C pays $2,000 → record to Undeposited Funds.
Friday: Deposit all three together at the bank in a single deposit ($4,500).
Bank feed shows $4,500 → transfer from Undeposited Funds.
✅ Method 2: Split a Bulk Deposit (use if you already deposited)
Best for: When you already deposited multiple payments as a single lump sum deposit, but forgot to use Undeposited Funds.
Open the downloaded bank deposit in your bank feed.
Click the three dots → Edit Transaction.
In the transaction details, click Split under Category.
For each payment in the deposit:
Select the correct Business Income category.
Enter the payment amount.
Check the box for Invoice Payment.
Save the splits.
Assign each split to the correct invoice.
Example:
Your bank shows one $4,500 deposit, but it came from three clients:
Split 1: $1,000 for Client A’s invoice
Split 2: $1,500 for Client B’s invoice
Split 3: $2,000 for Client C’s invoice
Result: The single bank deposit is correctly broken into individual invoice payments, keeping your books and bank in sync.
Benefits of Using Undeposited Funds
🎯 Perfect Reconciliation – Books and bank feed always match.
🔍 Clean Reports – Deposits show as single items; payments are still tracked individually.
⏰ Flexible Banking – Collect payments anytime, deposit when convenient.
Best Practices
Be consistent – Pick one method and train your team.
Deposit regularly – Don’t leave checks/cash sitting in Undeposited Funds too long.
Keep records – Save deposit slips and double-check totals.
Don’t misuse – Only use Undeposited Funds for bulk deposits, not single direct payments.