What Is Undeposited Funds in QuickBooks Online?

Published October 5, 2026 · LedgerMedic

On the balance sheet, Undeposited Funds is a holding account for money you have been paid but have not yet put into a bank deposit in QuickBooks. It is an asset (listed under Other Current Assets), and in a healthy file it is small and short-lived: payments arrive, then within a few days they are grouped into a deposit that matches the bank.

How to read it in under two minutes

1. Run the Balance Sheet report and find Undeposited Funds under Other Current Assets.
2. Click the amount to open the detail behind it. Every line is one payment or sales receipt that has not been put into a deposit.
3. Sort by date. Anything from the last few days is probably just waiting for the bank. Anything older than a month needs an explanation.
4. Compare the total to what you know is genuinely in transit (for example, card sales that the processor has not paid out yet). The difference is the amount that is stuck.

Why QuickBooks has this account at all

Customers often pay in batches: five cheques go to the bank in one trip, or a card processor pays out one lump sum for a week of sales. The bank shows one deposit, but QuickBooks has five payments. Undeposited Funds lets you record each payment when it arrives, then combine them into one deposit that matches the bank line exactly. It is a bridge between how payments are received and how the bank reports them.

What a normal balance looks like

• Only recent items: payments entered since your last trip to the bank or your last processor payout.
• Each line has a clear reason it has not been deposited yet.
• The balance falls to near zero every time you record the next deposit.

What a problem looks like

• Old items that never leave. Usually a deposit was created straight from the bank feed instead of from the payment, so the payment was never pulled out. See how to clear old Undeposited Funds.
• A balance that does not match the bank. See Undeposited Funds not matching a bank deposit.
• A negative balance. A deposit draws on a payment that is missing or was deleted. See why it goes negative.
• A balance with nothing to deposit. See Undeposited Funds has a balance but the deposit list is empty.

Can I get rid of the account?

You can stop using it for new payments by choosing a bank account in the Deposit to field when you receive a payment, but the account itself is created by QuickBooks and is hard to remove. We cover that separately in can you delete the Undeposited Funds account. Skipping the holding account is only safe if the payment really did land in the bank on that day; otherwise the bank feed will show the same money a second time.