When you accept a check for an invoice payment but don’t deposit it until a later date, the payment should be recorded to an Undeposited Funds account. This ensures the invoice is marked as paid on the correct date, and your bank statement reconciles with the check deposit.
For example, a client pays you by check on March 31, and you deposit the check on April 2. Although the invoice is marked as paid in March, by the time the check clears and posts to your bank account, it’s April.
An Undeposited Funds account tracks the funds that are expected to be deposited into or withdrawn from a bank account at a future date, usually within a few days. Examples of this are credit card sales that have been processed but have not yet been deposited into your bank, or checks (written or received) that have not been deposited into or withdrawn from your bank account.
Record Undeposited Checks to the Undeposited Funds Account
Create a new income transaction with the category of Undeposited Funds:
Navigate to Assets > Other Short-Term Asset > Undeposited Funds.
Apply the created income transaction to the invoice:
If there is an open invoice, follow these steps to apply the created income transaction to the invoice.
Record the payment directly to the invoice:
When you receive a check for an invoice payment, apply the payment directly to the invoice on the Invoices page. Select the Undeposited Funds account that you created as the payment account. Learn how to record a payment on an invoice.
Categorize the deposit as a transfer:
When you deposit the check, and the deposit transaction is imported, categorize the deposit as a Transfer from Bank, Credit Card, or Loan and select the Undeposited Funds account from the dropdown menu. Learn how to categorize transactions.
This process will leave you with three transactions: the original invoice payment recorded to Undeposited Funds, the imported transaction, and a Count-created transaction called Created Transfer to record the funds moving between accounts.
By following these steps, you ensure that your records in COUNT accurately reflect the movement of funds and that your financial statements remain accurate and up-to-date.