A new client that just started her business wanted to know why I discussing the Undeposited Funds account. She said that she does not yet have many clients, and therefore very few payments. So, what is the harm in having the payment go directly into the bank instead of Undeposited Funds?
My answer is to think about the future! Believe that there is soon going to be a time that multiple checks are being made on one deposit ticket. Currently, if there is only one check/payment deposited in the bank by itself, then it is fine to have it go directly to the bank vs. using the undeposited funds account.
However, when there are more than one check/payment for a deposit and they all get recorded directly to the bank register, you’ll have a hard time reconciling your bank account.
The goal is to get your deposits in QuickBooks to exactly match up to the deposits on your bank statement. That’s why undeposited funds is such an important feature.
Let’s say you deposited three checks together – one for $100, one for $200 and one for $300. The bank is going to show one deposit for $600. You don’t want to show three separate deposits in QuickBooks, you want to show one deposit for $600 too. Selecting the three deposits from undeposited funds lets you do that.