What are Undeposited Funds / Payments to Deposit?

What are Undeposited Funds?

Undeposited funds refer to a temporary account used in accounting to track money received by a business but still needs to be deposited into a bank account. It represents payments or receipts that have been received but are awaiting deposit. This account is typically used when a business gets multiple payments throughout the day or week and wants to group them together before making a single deposit.

Undeposited funds act as a holding account until the funds are deposited into the appropriate bank account, streamlining the reconciliation process and ensuring accurate financial records. Once the funds are deposited, the balance in the Undeposited Funds account is reduced to zero.

How Undeposited Funds Relate to Stripe Payouts

Because your funds are not immediately paid out from Stripe, your Stripe funds remain in your Stripe Balance until a payout is made from Stripe. This is reflected in QuickBooks as Undeposited Funds or Payments to Deposit. (Technically, this account could have any name, but these are the most common two names - Account Type in QuickBooks Online will always be Undeposited Funds).

Undeposited Funds and your Stripe Balance should always match with minor exceptions, like if you have specific fees that only appear upon payout. These fees or special charges will be missing in Undeposited Funds and will be reconciled upon payout into a bank deposit.

Although some integrations use Bank connections or other methods as a holding account, we prefer Undeposited Funds as our holding account because it allows us to create a bank deposit and creates a "match" on your bank feed. This creates an immediate reconciliation and extra level of validation compared to a Transfer.

When it comes to selecting a holding account, you have options. Read more about how to choose a Stripe Holding Account here.