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
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Banks vs. books mismatch: Banks show one deposit; your accounting shows multiple payments. Without Undeposited Funds, reconciliation fails.
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Cleaner records: Grouping payments first means your books match your bank feed exactly.
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Saves time: No more puzzling over deposits during reconciliation.
When to Use
Use Undeposited Funds if you:
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Collect checks or cash during the week and deposit them together
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Combine multiple payments into one bank deposit
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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.
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Go to Invoices.
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For each invoice payment:
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Click the three dots → Apply Payment → Create Transaction.
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In the payment details, set Deposit To = Undeposited Funds.
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Deposit the checks or cash together at your bank.
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When the combined deposit appears in your bank feed:
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Categorize it as a Transfer from Undeposited Funds.
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Result: Your books show one combined deposit that perfectly matches the lump-sum deposit in your bank.
Example Workflow:
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Monday: Client A pays $1,000 → record to Undeposited Funds.
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Wednesday: Client B pays $1,500 → record to Undeposited Funds.
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Friday: Client C pays $2,000 → record to Undeposited Funds.
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Friday: Deposit all three together at the bank in a single deposit ($4,500).
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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.
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Open the downloaded bank deposit in your bank feed.
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Click the three dots → Edit Transaction.
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In the transaction details, click Split under Category.
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For each payment in the deposit:
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Select the correct Business Income category.
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Enter the payment amount.
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Check the box for Invoice Payment.
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Save the splits.
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Assign each split to the correct invoice.
Example:
Your bank shows one $4,500 deposit, but it came from three clients:
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Split 1: $1,000 for Client A’s invoice
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Split 2: $1,500 for Client B’s invoice
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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
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Be consistent – Pick one method and train your team.
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Deposit regularly – Don’t leave checks/cash sitting in Undeposited Funds too long.
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Keep records – Save deposit slips and double-check totals.
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Don’t misuse – Only use Undeposited Funds for bulk deposits, not single direct payments.