What is Undeposited Funds?

Note: QuickBooks has recently renamed "Undeposited Funds" to "Payments to Deposit" on some QBO accounts, but they are exactly the same account with the same functionality.

What is Undeposited Funds (or Payments to Deposit)?

The Undeposited Funds (or Payments to Deposit) account in QuickBooks Online serves a special function – it’s a special temporary account that QuickBooks uses to hold payments received before you deposit them into in the bank.  Think of the Undeposited Funds account as an envelope where you keep cash and checks until you take them to the bank.

How does FlexBooks use Undeposited Funds?

In order for FlexBooks to create your batch deposits for you, FlexBooks first temporarily sends all credit card transactions to Undeposited Funds (or Payments to Deposit).  It then batches all of these transactions up into a single QB Deposit which then removes the funds from Undeposited Funds (or Payments to Deposit) and puts them in your checking account.

Why Is Undeposited Funds (or Payments to Deposit) Never Zero?

You can look at the "Payments to deposit"  or "Undeposited Funds" account as the "How-Much-of-My-Studio's-Money-is-Transfirst-Currently-Holding?" account.

As long as your studio is charging credit cards – Transfirst is going to be holding some amount of your money for some number of days, and so the "Payments to deposit" balance will always be greater than zero.  (This is a good thing, right?)

This is an accurate accounting of reality – your studio has booked revenue but hasn't received payment for that revenue yet.

If you're concerned about the accuracy of this account – you can reconcile your "Payments to deposit"  the same way you would reconcile a checking account by reconciling against the MBO Settled Transactions report. 

But by "Match"-ing all the Transfirst deposits, FlexBooks is already auto-reconciling this for you.