Reconciling Undeposited Funds and Your Stripe Balance

One of the complex issues our app handles is a reconciliation of your Undeposited Funds account with your Stripe Balance. First, let's review what we mean by these two terms.

Undeposited Funds

Undeposited Funds is an asset type in QuickBooks Online. It can have different names (such as Payments to Deposit), but the detail type is always Undeposited Funds. The functionality of this account is simple. It is the account where funds are held prior to being deposited. So if you generate an invoice in QuickBooks, and someone pays that invoice (debit to the asset), but the deposit has yet to come to your bank, you will have a balance in Undeposited Funds. Once the deposit arrives in your bank account, Undeposited Funds are emptied (credit to the asset). 

Our app uses this functionality because your Stripe Balance has the same functionality. Stripe holds funds that you have been paid (revenue) but have not been transferred or deposited into your bank account. 

Stripe Balance

At any time, you can view your current Stripe Balance within the Stripe dashboard UI. This number represents the amount of money Stripe is currently holding on your behalf, waiting to be paid to you in a Stripe payout.

You can view your Stripe balance historically and even see day-by-day Stripe balance information. You can view your current balance under the Balances tab and your historic balances by looking at Reports -> Balance.

Reconciliation and Common Issues

While Undeposited Funds and your Stripe Balance should be constantly in balance, there are several reasons why they may not be. Some reasons are more complex than others, and depending on your transaction volume, you may need to consult with your accountant to reconcile these accounts. Note that Acodei only offers accounting support within our help articles.

1. Starting Balance issues
2. Mismatches on the data feed
3. Timing of Payouts
4. Non-Stripe Transactions in Undeposited Funds
5. Complex Accounting Challenges

We will now break down each of these issues and recommend solutions. If you believe none of these cases match your specific situation, please message us at support@acodei.com

Starting Balance Issues

This case is fairly simple to understand. Imagine you have a $1,000 Stripe Balance when you sign up for Acodei. Due to various factors, Acodei will always start the Undeposited Funds balance at $0. If you run historical data, Undeposited Funds will be at $0 at the very start of your historical data. 

In this case, create a starting balance for Undeposited Funds for your Stripe Balance at the start of using the Acodei app. Alternatively, you could run historical data back to a point where your Stripe Balance was $0. 

Mismatches on the Banking Feed

We have written another article to explain the complexities of mismatching on the banking feed, which you can take a look at if you need to understand this issue. 

To review our logic from earlier, a payment made in Stripe creates a debit to Undeposited Funds. A payout from Stripe creates a credit to Undeposited Funds. If the payout is incorrectly matched on the banking feed, the credit to Undeposited Funds will fail to happen, and your balance will be thrown off.

To correct this, you need to ensure that all payouts from Stripe are appropriately matched to the Acodei-generated bank deposit. To do this, go to the banking feed in QuickBooks, look at categorized transactions, and review the transactions from Stripe. If this is the error, undo the payouts, verify that all payouts have synced on the Acodei Data Feed, then add the deposits again, ensuring they are properly matched to their Acodei-generated payout. 

Review Undeposited Funds again to see if there is still a balance mismatch.

Timing of Payouts

The Stripe payout contains a large amount of information - including all transactions and fees included in a payout. Most importantly, for our purposes here, the Stripe payout contains fees and sometimes other charges that are not contained in the normal transactions we capture. 

For example, if you subscribe to Stripe Radar or if you have a Stripe Capital Loan, we will only capture that information upon Payout. Since payouts occur only daily or weekly, the balance and Undeposited Funds will always be off by some amount as we retrieve those additional charges. Typically, this does not result in significant discrepancies, but it is possible to see fairly large differences depending on what's happening with your Stripe payouts.

Non-Stripe Transactions in Undeposited Funds

The most complex issue to tackle is if other non-Stripe transactions are also regularly flowing through Undeposited Funds. Although we like Undeposited Funds for a number of reasons, this is why some accountants feel Undeposited Funds can be a bit of a black hole. Imagine if you have Paypal, Square, Stripe, and Invoices all running through Undeposited Funds - it can turn into quite the mess!

If the non-Stripe transactions are relatively minimal, it is easy to add up non-Stripe transactions and add those to the Stripe balance to reconcile. 

If non-Stripe transactions are plentiful and Undeposited Funds truly are a black hole, you or your accountant will need to break down that complexity and reconcile the total based on the Stripe balance and other elements in the account. While this is a lot of work, we anticipate that the Stripe component of the audit will be the least complex since we debit and credit every single transaction that takes place on Stripe.

Complex Accounting Challenges

There are some times that demands from certain Stripe accounts go beyond the functionality currently in our app. For example, at this time, we need a more robust connected account feature. Although we are working on a solution for this and may have one in the future, a complex situation like this would make payouts not match and would therefore throw off the match between Undeposited Funds and your Stripe Balance. If this is the case, we recommend deleting out your data and finding another solution. 

Conclusion

As you can see, the reconciliation of Undeposited Funds and your Stripe balance can be a lot of work - however, we hope our app makes this process easier for you. If you get to the point of frustration and you decide the complexity here is too much, we are always happy to delete out data and offer refunds as needed. Feel free to contact us anytime at support@acodei.com