Undeposited Funds
Definition
A temporary account in QuickBooks where received payments wait until they are matched to the bank deposit they arrived in.
Want a deeper explanation?
Undeposited Funds is useful when several payments arrive in one deposit. When payments are never matched, though, income gets counted twice: once from the invoice and once from the bank feed.
The balance should only include payments truly waiting for deposit. Watch for: a large Undeposited Funds balance from months ago, which almost always means duplicated revenue.
Example
Three customer checks totaling $9,400 sit in Undeposited Funds until you match them to the single $9,400 bank deposit.