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How do I clear old QuickBooks Payments from Undeposited Funds when merchant statements are no longer available?

Forum|Forum|1 year ago
July 11, 2025
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I am a bookkeeper that has a client that used QB payments back in 2019-2020. Her bank account will reconcile but only if I do not match received payments to deposits because I cannot verify what payments belong to what deposits. QB support said that QB only holds 2 years of statements so there is not a way for me to get those years and the client does not think they saved them. The payment ID shows in the memo for all of the QB payments received but because QB auto recorded the 'receive payment' it appears they are all still sitting in Undeposited Funds with no way to change the account it was deposited to. This has created a massive balance in undeposited funds even though the money was deposited to the bank (I understand this account is a temp hold for transactions until the actual deposit is in the bank). I am concerned since I cannot verify the received payments are accurate and have no way of know which deposit they were apart of that it will create more issues.

When I do match receive payments to deposits as best that I can tell it should go, the bank reconcile ended up having a bunch of accounts receivable which I am assuming is because the 'receive payment' was set to the same bank account but then I couldn't get the account to reconcile. I am at a loss as to how I should get the undeposited funds account to balance and only show the current undeposited funds? The balance sheet for this client is crazy looking because of it.

QuickBooks Online

Best answer by sofiamdc-2341

When old received payments sit in Undeposited Funds, it usually means they were never matched to the bank deposits that QuickBooks Payments sent over to your client's bank account. The best fix is to use the Bank Deposit feature to link those received payments to the correct deposits. However, since these are several years old and merchant statements are no longer available, you'll want to gather the bank's records first and work with an accountant before making changes to your books.

Step 1: Get the bank statements for 2019-2020

Intuit holds QuickBooks Payments merchant statements for two years, but your client's bank typically keeps its own statements for five to seven years. Contact the bank and request the 2019-2020 statements. Those statements will show the batch deposit amounts and dates that came in from QuickBooks Payments. You can use the payment IDs visible in the QuickBooks memos on the received payments to cross-reference which payments belonged to which deposit.

Step 2: Create Bank Deposits to match payments to bank deposits

Once you know which received payments belong to each batch deposit:

Go to +Create, then select Bank Deposit.
Select the bank account where the QuickBooks Payments deposit landed.
Set the date to match the actual deposit date shown on the bank statement.
In the list of payments, select the received payments that match that deposit's total. Use the payment IDs, dates, and amounts to identify the right ones.
Confirm the total matches the bank statement amount, then select Save and close.

Repeat for each batch deposit. This moves the payments out of Undeposited Funds and into the bank account without creating any new income, since the income was already recorded when the invoices were applied.

Important: journal entries carry risk in this scenario

A journal entry from Undeposited Funds to the bank account is sometimes used when payments can't be matched to specific deposits. However, if a bank feed deposit is then also matched separately, you could end up with a double deposit on the bank account side. Because of the complexity here, have your accountant review any journal entry approach before proceeding.

This situation involves several years of records and real reconciliation risk, so working with your accountant through the matching process is the right call. If you have questions as you work through it, we're here to help.

Helpful Resources:

R

Rusimyhr

QuickBooks Team

I understand how important it is to keep your client’s financial records accurate, @Dancz, and we're here to help you with clearing the undeposited funds account and reconciling transactions.

First, you can start by reviewing your client’s bank statements from 2019-2020 via their online bank portal to identify deposits that correspond to payments in the undeposited funds account. Most Banks keep their online bank statements data up to 5 to 7 years before permanently deleting it. Also, using payment IDs displayed in QuickBooks memos can also help match payments to specific deposits.

Once you’ve matched the payments to deposits, you can use the Bank Deposit feature to transfer them from undeposited funds to the correct bank account. Here's how:

1. Go to Create and select Bank Deposit.

2. Select the payments that correspond to the deposits.

3. Then click Save and close.

For payments that can’t be matched to any deposits, applying a Journal Entry will allow you to reflect them accurately in the accounts. This helps clear the balance in undeposited funds for payments that don’t align directly with bank deposits. Here's how:

Go to Create, then select Journal Entry.
Set the date for the journal entry based on when the funds were originally deposited into the bank account.
On the first line, select Undeposited Funds from the account dropdown. Enter the payment amount in the Debit column to reduce its balance.
On the second line, select the Bank Account into which the money was deposited. Enter the same payment amount in the Credit column to reflect the deposit.
Use the Description field to add details for reference, such as the payment ID or description of the adjustment.
Click Save and Close to finalize the journal entry.

It's also worth noting to ensure the amounts in Debit and Credit are equal to keep the books balanced.

Once these adjustments are made, you can begin reconciling the account, ensuring all cleared deposits align with the bank register. Address any discrepancies during reconciliation and review the balance sheet to confirm that the undeposited funds account now reflects only current undeposited transactions.

If additional guidance and clarification is needed, please don't hesitate to reach out. The Community space is available 24/7.

D

DanczAuthor

Thank you for your response. Would adding the journal entry from undeposited funds to the bank that the 'received payments' went into create an increase on the QB bank balance? If the 'received payment' is not matched to the banks downloaded deposit I was under the impression that it would create a double entry of income. The received payments I cannot match came from Quickbooks payments. The QB payment ID's are in the received payment so I have assumed that meant the money was truly deposited. I can verify that I received the batch deposit from Intuit however I cannot verify the specific invoices the batch payment deposit included due to not having it saved and Intuit saying they only keep 2 years of data. I want to make sure my QB balance continues to match the bank balance.

S

SheandL

QuickBooks Team

Thanks for getting back to us with more details, Dancz. Yes, adding a journal entry from Undeposited Funds to the bank account will increase QuickBooks Online's (QBO) bank balance.

If the actual deposit is already recorded in QBO, adding a journal entry creates a duplicate deposit, inflating the bank balance unnecessarily. This happens because the journal entry would account for the same funds already recorded.

You're also correct that the Received Payments in QBO are already recognized as income in QBO when applied to invoices. If these payments are later tied to a deposit or journal entry that incorrectly adds income again, it will result in a double entry of income.

Since the Received Payments you’re working with came from QuickBooks Payments, the best method is to use the Bank Deposit feature to move them from Undeposited Funds to the correct bank account. To do so, here’s how:

Open your QuickBooks account.
Go to the plus (+) icon, then select Bank Deposit.
Select the Account where the funds were deposited from the dropdown, then make sure to set the Deposit Date to match the date of the deposit in your bank statement.
Select the payments that relate to the batch deposit in the Received from column. You can use the QB Payment IDs, dates, and amounts as references to select the correct payments.
At the bottom of the screen, check that the total deposit matches the bank statement.
Once done, Save and Close.

Alternatively, if you can't match payments to batch deposits due to missing invoice details, you can use a clearing account as a temporary placeholder to move payments to the bank account via journal entries. To complete this process, follow the steps below:

Set up a clearing account.
Next, click on the plus (+) icon and choose Journal Entry from the menu.
Select the appropriate date range.
Select the clearing account as your debit and select undeposited funds as credit.
Add the other necessary information.
You can also add a memo to identify this transaction.
Once you've made sure everything is accurate, click Save and Close.

Afterward, you can reconcile your account to ensure all deposits align with the bank register. Moreover, I still recommend collaborating with your accountant, as they can provide expert guidance on the most effective approach to address and resolve this matter.

If you have other questions feel free to comment them below.

sofiamdc-2341

Answer

Community Manager