Undeposited funds is commonly used as a temporary holding account for receipts before they are grouped into a bank deposit. It helps connect individual customer payments to a deposit that may combine several receipts. Software workflows differ, so the reviewer checks the original payments and deposit records before correcting a balance.
Get help with your monthly booksPractical records guidance · Updated October 8, 2026 · Fictional examples
A bank deposit can combine checks or other receipts from several customers. The holding account links those individual payments to the combined deposit without creating additional sales. Bank matching must follow the existing receipt flow.
A remaining amount might be awaiting deposit, duplicated, grouped incorrectly or missing a deposit link. Do not clear it with an arbitrary expense. Compare customer receipts, deposit records and statement activity, including the relevant dates.
Illustrative example · Fictional data
Illustrative example: customer receipts of $300 and $200 are grouped into one $500 bank deposit. The deposit moves the existing receipts into the bank account. Recording another $500 sale would duplicate the original activity in a simplified accrual workflow.
No. Some receipts may legitimately await deposit. Age, evidence and the software workflow determine the question.
Do not use an unsupported balancing entry. It can conceal missing links or affect invoice balances; investigate the records first.
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