Glossary
Undeposited Funds
Undeposited Funds is a QuickBooks holding account that keeps customer payments until you record the bank deposit that combines them, so your books match the single lump sum the bank actually shows.
Also called: UF, undeposited funds account, payments to deposit
Definition
Your bank does not see the four checks you took to the branch on Tuesday. It sees one deposit. QuickBooks, meanwhile, recorded four separate customer payments. Undeposited Funds is how those two views get reconciled: the payments wait in a holding account, and when you record the deposit, they leave together as one transaction that matches the bank line exactly.
Intuit describes the account as a temporary lockbox that keeps your payments until you record a formal bank deposit, and says the two-step process is what ensures QuickBooks always matches your bank records. It is not a real bank account and it is not meant to hold a balance for long. A large, aging Undeposited Funds balance is one of the most common signs that a QuickBooks file has payments recorded that were never tied to a deposit.
For a business running on Stripe, this account takes on a second job. Stripe does not deposit payments one at a time either. It batches them into payouts, which makes the gap between "money received" and "money in the bank" a permanent feature of your books rather than an occasional one.
Key points
- +A holding account for payments received but not yet deposited, not a bank account.
- +Payments land there from Receive Payment and sales receipts, then leave via Bank Deposit.
- +Its purpose is matching: many payments in QuickBooks, one lump sum on the bank statement.
- +A growing balance usually means deposits were never recorded against the payments sitting in it.
- +In a Stripe workflow it is one of two possible holding accounts, and the alternative is a regular asset clearing account.
The two-step workflow it exists for
Step one is receiving the payment. When you record an invoice payment or a sales receipt, the money goes to Undeposited Funds instead of straight to checking. The invoice closes, Accounts Receivable drops, and the cash sits in the holding account.
Step two is the deposit. In QuickBooks you open Bank Deposit, and every payment waiting in Undeposited Funds is listed there for you to select. You tick the ones that went to the bank together, and QuickBooks writes a single deposit for the total. That one transaction is what your bank feed matches against.
Skipping step two is the failure mode. Payments accumulate, the account grows, and the bank feed shows deposits that QuickBooks cannot match to anything because the matching payments are still sitting in the lockbox. The fix is always the same: record the deposits that actually happened and select the payments they contained.
Why Stripe makes this account matter more
A Stripe payout is a batch. Two days of charges, minus fees, minus any refunds, arrive as one deposit in your bank account. Every individual sale needs to be on your books for revenue and tax to be right, but the bank only ever sees the net lump sum.
That is structurally the same problem Undeposited Funds was built for, at a much higher frequency. If you sell through Stripe, you are not deciding whether to deal with a holding account. You are deciding which account holds the money and what shape the payout takes when it clears.
The consequences are concrete. With Undeposited Funds, the payout arrives as an itemized deposit that lists each charge, refund, and fee it contains, which is a genuinely useful audit trail. With a clearing account, the payout is a single transfer for the net amount, and the composition lives on the individual sales records instead. Both reconcile. They just produce different documents for whoever opens the books in eighteen months.
Undeposited Funds or a clearing account
The honest summary is that Undeposited Funds is the more literal model and a clearing account is the more forgiving one.
Undeposited Funds suits businesses that want the deposit itself to document what it contains, and that are comfortable with stricter sequencing: an itemized deposit can only be built once every transaction inside it already exists in QuickBooks. If a single charge is missing or errored, the deposit waits.
A regular asset clearing account removes that dependency. The payout posts as its own transfer regardless of what else has synced, which is why higher-volume accounts and multicurrency setups usually land there. The tradeoff is that your bank line no longer shows its own composition, so answering "what was in this deposit?" means going back to the sales records.
One detail catches people either way: this is not a setting you change casually once you are live. Historical records point at whichever account was in force when they synced, so switching mid-life is a migration, not a toggle.
How Acodei uses Undeposited Funds
In Acodei, Undeposited Funds is one of two options for what the product calls the holding account: the QuickBooks account that stands in for your Stripe balance. Every synced sale is deposited into it, and every payout moves money out of it into your real bank account. Each sales record Acodei writes carries the resolved holding account as its deposit target.
The two modes produce different payout records. On Undeposited Funds, a payout becomes an itemized Deposit that sweeps the individual payments into the bank, which means every underlying transaction has to already exist in QuickBooks before the deposit can be built. On a non-Undeposited-Funds asset account, the payout is a single Transfer for the net amount and carries no such prerequisite.
Fees follow the same split. With Invoice Sync enabled on a non-Undeposited-Funds account, recording fees as an expense is the only option. With Invoice Sync on Undeposited Funds, fees can be shown as expenses or on the bank deposit. Invoice payments themselves are placed according to whichever holding account you configured, with one documented exception: the Payments Marked as Paid Outside Stripe setting can route its payment to Undeposited Funds regardless of your normal holding account.
Two balance movements are worth knowing before you choose. An instant payout is recorded as a Transfer, and Stripe recoups it on your next regular payout, which on an Undeposited Funds setup appears as a negative Advance line through Balance Transaction Mapping. A negative payout, on a day when refunds exceed sales, posts as a reversed Transfer from the bank back to the holding account in both modes.
Acodei documents non-Undeposited-Funds asset accounts as the recommended default for multicurrency users, Invoice Sync users, and high-volume accounts. Invoice Multicurrency in particular is not supported on Undeposited Funds. The holding account is resolved per transaction, starting from your default deposit account, then per connected Stripe account if you use multiple holding accounts, then by currency if you are on a multi-balance Stripe account with Multicurrency Support, which the Acodei team enables rather than being self-serve. Once transactions have synced, the holding account is locked and can only be changed while an account has zero synced transactions.
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Start a free trialFrequently asked questions
What is the Undeposited Funds account in QuickBooks?
It is a holding account for payments you have received but not yet deposited. Intuit describes it as a temporary lockbox that keeps payments until you record a formal bank deposit, so that several payments in QuickBooks can be combined into the one lump sum your bank statement shows.
Why is my Undeposited Funds balance so high?
Almost always because payments were recorded but the matching bank deposits never were. The payments stay in the holding account waiting to be selected on a Bank Deposit. Recording the deposits that actually happened, and ticking the payments they contained, clears the balance.
Should I use Undeposited Funds for Stripe payouts?
It depends on which document you want. Undeposited Funds produces an itemized deposit that lists the charges, refunds, and fees inside each payout, at the cost of requiring every one of those transactions to be synced first. A regular asset clearing account produces a single net transfer with no such dependency, which is why it is the recommended default in Acodei for multicurrency, Invoice Sync, and high-volume accounts.
Is Undeposited Funds a bank account?
No. It is a holding account that sits between receiving a payment and depositing it, and it should not carry a meaningful balance for long. Money only reaches an actual bank account in QuickBooks when you record the deposit.
Can I switch from Undeposited Funds to a clearing account later?
Not freely. In Acodei the holding account is locked once transactions have synced, and the change is only available while an account has zero synced transactions. Historical records point at the account that was in force when they were written, so switching after the fact is a deliberate migration rather than a settings change.
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