--- title: "Why is Undeposited Funds negative? | Ledgerbrook" source: https://ledgerbrook.com/fixes/undeposited-funds-negative/ description: "Why Undeposited Funds is negative in QuickBooks Online, the 4 entries that cause it, and how to bring it back to zero." --- [Fixes library](/fixes/) # Why is Undeposited Funds negative? Updated October 9, 2026 · [Omkar Moraye](/about/) [](https://www.linkedin.com/sharing/share-offsite/?url=https%3A%2F%2Fledgerbrook.com%2Ffixes%2Fundeposited-funds-negative%2F%3Futm_source%3Dlinkedin%26utm_medium%3Dsocial%26utm_campaign%3Dshare)[](https://x.com/intent/post?url=https%3A%2F%2Fledgerbrook.com%2Ffixes%2Fundeposited-funds-negative%2F%3Futm_source%3Dx%26utm_medium%3Dsocial%26utm_campaign%3Dshare&text=Why%20is%20Undeposited%20Funds%20negative%3F)[](https://www.facebook.com/sharer/sharer.php?u=https%3A%2F%2Fledgerbrook.com%2Ffixes%2Fundeposited-funds-negative%2F%3Futm_source%3Dfacebook%26utm_medium%3Dsocial%26utm_campaign%3Dshare)[](mailto:?subject=Why%20is%20Undeposited%20Funds%20negative%3F&body=Why%20is%20Undeposited%20Funds%20negative%3F%0A%0Ahttps%3A%2F%2Fledgerbrook.com%2Ffixes%2Fundeposited-funds-negative%2F%3Futm_source%3Demail%26utm_medium%3Dsocial%26utm_campaign%3Dshare) ## Why is Undeposited Funds negative in QuickBooks Online? Undeposited Funds goes negative when something takes money out of it that no payment put in. The 4 usual causes are a refund paid from Undeposited Funds, a deposit line coded to the account by hand, a bank feed deposit categorized to it, and a journal entry crediting it. Sounds like - The balance sheet shows a negative balance in Undeposited Funds or Payments to deposit - A bank deposit was recorded but the account balance dropped below zero instead of clearing - Customer payments show as deposited, but total cash on reports does not tie out - A negative entry appears in the Bank Deposit screen that cannot be selected on its own ## Why is Undeposited Funds negative on the balance sheet? In QuickBooks Online, Undeposited Funds (shown as Payments to deposit in some newer files) is an asset account under Other Current Assets on the balance sheet. It acts as a temporary holding drawer for customer payments before deposit into a bank account. An asset account increases with debits and decreases with credits. Receiving a customer payment or sales receipt debits Undeposited Funds. Creating a bank deposit credits Undeposited Funds. A negative balance means credits exceed debits: more has been taken out than any payment put in. A positive balance that never clears means deposits were skipped, which is [Undeposited Funds piling up](/fixes/undeposited-funds-pileup/). A negative one means something other than a payment is moving money through the account. On the balance sheet it sits under Current Assets. A negative balance shows as a negative asset, which understates current assets by the same amount. ## Should Undeposited Funds be zero? Undeposited Funds should regularly return to zero. Customer payments collect during the week, and recording the bank deposit clears the balance to $0.00. At month-end close, once all payments are deposited to match the bank statement, the balance should be zero. It can hold a positive balance if payments received on the final day have not yet reached the bank. It should never be negative. Nobody can deposit more than they collected, so a negative balance is always an entry that should not be there. ## The 4 transactions that cause negative Undeposited Funds Each of these credits Undeposited Funds with no payment behind it. They are listed in the order they turn up in files we review. 1. **A refund paid out of Undeposited Funds.** A refund receipt whose Refund from account is Undeposited Funds takes money out of an account that never held it. This is the case Intuit’s own help article uses as its example. It shows up on the Bank Deposit screen as a negative line that cannot be deposited on its own. 2. **An Undeposited Funds line typed into a deposit.** On the Bank Deposit screen, ticking payments in the top section is what moves them out of Undeposited Funds. The bottom section, Add funds to this deposit, is for money with no payment behind it. Choosing Undeposited Funds as the account on one of those lines credits the account with nothing to offset it. 3. **A bank feed deposit categorized to Undeposited Funds.** Adding a deposit in Transactions > Bank transactions with Undeposited Funds as the category debits the bank and credits Undeposited Funds. If the payment it was meant to be is not already sitting in the account, the balance goes negative by that amount. When the payment is entered later as well, the same sale is in the books twice, which is the pattern on [sales counted twice from one deposit](/fixes/sales-receipt-and-deposit-counted-twice/). 4. **A journal entry that credits Undeposited Funds.** A journal entry written to “clear” the account, or to fix a deposit, credits it directly. It is easy to spot in the register because it is the only Journal Entry type in a list of payments and deposits. | Cause | What you see in QuickBooks | Fix | | --- | --- | --- | | Refund paid from Undeposited Funds | Negative line on the Bank Deposit screen | Net it against a payment, or use the zero-total deposit below | | Undeposited Funds typed into a deposit | Deposit with Undeposited Funds under Add funds to this deposit | Remove the line, or recode it to the right account | | Feed deposit categorized to Undeposited Funds | Bank feed entry coded straight to the account | Undo it in Categorized, then match it to the payment | | Journal entry crediting the account | Journal Entry in the account register | Reverse it once you know what it was meant to fix | ## How do I find the entry that made it negative? To clear the negative balance, isolate the deposit that pushed the register below zero. Method 1: Check the account register 1. Go to Settings ⚙ > Chart of accounts (or Transactions > Chart of accounts). 2. Find Undeposited Funds (or Payments to deposit) and select View register. 3. Select Date to sort chronologically. 4. Review the running balance to find where it flips negative. 5. Select the deposit on that date to inspect its lines. Method 2: Run an account report 1. In the Chart of accounts, find Undeposited Funds. 2. Select the dropdown arrow next to View register, then select Run report. 3. Set Report period to All Dates and sort by Date, oldest first. You can also run the Deposit Detail report (Reports > search “Deposit Detail”) to review split lines across past deposits. ## How do you remove negative undeposited funds from a balance sheet? Apply the fix for your specific cause: Fix a manual deposit line: Open the deposit from the register. Under “Add funds to this deposit,” locate the line coded to Undeposited Funds. If added by mistake, select the trash icon to remove the row, then select Save and close. If it represents real income, recategorize it to the correct revenue account. Fix a journal entry: Find out what it was written to correct before reversing it. If it moved a real payment, enter the payment properly (+ Create, or + New in older layouts, then Receive payment) and delete the journal entry. If it was written to force the balance to zero, delete it and fix the cause instead. Fix a bank feed categorization: Go to Transactions > Bank transactions. Under Categorized, find the deposit and select Undo. On the For review tab, match the line to the customer payment, entering the payment first if it does not exist. For matching rules, review our guide on [bank feeds in QuickBooks Online](/blog/bank-feeds-in-quickbooks-online/). Clear a refund with a zero-total deposit: A negative line on the Bank Deposit screen cannot be deposited alone, because a deposit total cannot be below zero. If there is no payment to net it against, Intuit’s process uses an offsetting journal entry: 1. Select + Create, then Journal entry. 2. Enter the refund date. On line 1, debit Undeposited Funds for the refund amount. On line 2, credit the bank account the refund was paid from. Select Save and close. 3. Select + Create, then Bank deposit. 4. Tick the negative line and the journal entry. The deposit total must be $0.00. 5. Select Save and close. ## Before you delete or edit any transaction Before editing or deleting any transaction, verify these three controls: 1. Reconciled status in the register. Open the bank register (Settings ⚙ > Chart of accounts > View register). Find the deposit. If marked “R”, the transaction was reconciled on a statement. Editing or deleting it alters the opening balance of future reconciliations. Review [editing a reconciled transaction](/fixes/edit-a-reconciled-transaction/) before modifying reconciled entries. 2. Linked invoices. Removing or editing a payment reopens the invoice it paid, so check Accounts Receivable aging after any change. 3. Closed accounting periods. If a closing date password is set (Settings ⚙ > Account and settings > Advanced > Accounting), changing transactions in closed years shifts retained earnings and prior tax figures. Consult your tax preparer before altering closed periods. ## What this costs to fix An isolated negative deposit from this week takes minutes to resolve. When negative Undeposited Funds spans multiple quarters, closed reconciliations, and mismatched bank feed downloads, it requires a structured [cleanup](/quickbooks-cleanup/) engagement. $99per month of backlog20% off 6+ months If your Undeposited Funds balance has been negative across several statement cycles, [send the file for a free review](/contact/?from=fixes%2Fundeposited-funds-negative) before deleting any deposits. Every offer is on the [pricing page](/pricing/). Ledgerbrook Behind on your QuickBooks books? 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