Why Your Dubsado Payments Are Sitting in QuickBooks Undeposited Funds

It’s embarrassing to admit, but it took me three years to figure out why payments kept sitting in the Undeposited Funds account in QuickBooks.

Three. Years.

Each year, my tax accountant helped me clean up my bookkeeping. I learned a little more along the way and built a weekly bookkeeping habit that kept things me from having hours of bookkeeping to do to get ready for tax time.

I added an end of the month close the books checklist. That’s when I understood enough to notice those payments sitting in Undeposited Funds and realized that learning how to handle them throughout the year could make tax appointments a lot less painful.

Here’s What Was Happening

My clients had paid. The money had reached my bank account. But when I looked at the Profit and Loss Statement, there was money in my bank account and money in undeposited, and I couldn’t figure out what I was missing.

Eventually, I booked an appointment with QuickBooks live help. The person who walked me through it explained one simple bookkeeping task I hadn’t known I needed to do.

And because I doubt I’m the only business owner who has stared at that account wondering what it means, I’m sharing what finally made it click.

What is Undeposited Funds in QuickBooks?

The explanation that helped me was this:

Undeposited Funds is like your bank bag.

Before electronic payments, you might collect cash and checks from clients and put them in a bank bag. You had received the money, but you still needed to take it to the bank and deposit it.

QuickBooks uses Undeposited Funds as a temporary holding account for recorded payments before you record their bank deposit.

For example, three client payments might arrive in your bank account as one combined payout. Undeposited Funds gives you a place to hold those separate payment records until you group them into the deposit that matches your bank.

That was the piece I was missing: the money reaching my bank account didn’t mean I had finished recording the deposit in QuickBooks.

How Dubsado fits into this

Dubsado can sync invoices and payments to QuickBooks Online, depending on your integration settings.

In my setup, client payments were being recorded in QuickBooks, but I still needed to record the corresponding deposits.

If you want more background on connecting the two platforms, read my post about the Dubsado–QuickBooks integration.

Before following the steps below, check whether another integration already records your payments or deposits. You don’t want Dubsado and a separate payment processor connection recording the same payment twice.

This walkthrough covers the process I use when payments hit my bank account.

How I record my Dubsado payment deposits in QuickBooks Online

I use Stripe payout details to see which payments and fees belong to each deposit. If your payouts come through another processor, use its payout report.

Step 1: Check that the client payment is recorded

Find the client in QuickBooks and review their invoice and payment records.

If the payment is already there, don’t enter it again. Confirm the amount, invoice, and payment date, and check that it is in Undeposited Funds.

If it hasn’t synced, check Dubsado before entering it manually so it won’t be recorded twice later.

To record a missing payment manually:

1. Select + Create → Receive payment.
2. Choose the customer and the invoice being paid.
3. Enter the payment date and full amount the client paid, before processing fees.
4. Select Undeposited Funds in the Deposit to field.
5. Save the payment.

The client’s payment is now recorded. The bank deposit comes next.

Step 2: Wait for the payout to reach your bank

Once the money arrives, open the payout details in your payment processor.

Check which client payments it includes, the fees deducted, and the amount deposited. One payout may include several payments.

I use the actual payout details rather than assuming one client payment equals one bank deposit.

Step 3: Record the bank deposit and fees

This is part of the step that I had all wrong. Here’s how to record bank deposits and processing fees.

In QuickBooks:

1. Select + Create → Bank Deposit.
2. Choose the bank account that received the payout.
3. Enter the date the deposit reached your bank.
4. Select the payments included in that payout.
5. Under Add funds to this deposit, enter any processing fees deducted from this payout as a negative amount, using your processing-fee expense account.
6. Confirm that the deposit total matches the amount received.
7. Save and close.

In my task card, the receiving bank account was named “Operating Expenses.” Use your own receiving bank account here; the destination for the deposit is different from the expense account used for fees.

Here’s a simplified example:

Item	Amount
Client payment	$1,000
Processing fee deducted	−$30
Deposit received by the bank	$970

The client still paid $1,000. Recording the $30 fee separately explains why the deposit was $970.

Step 4: Match the deposit in your bank transactions

Once the downloaded deposit appears in QuickBooks bank transactions, match it to the deposit you recorded.

Check the amount, date, and bank account before confirming the match. If QuickBooks doesn’t suggest it, use the matching options to find the correct deposit.

Match the existing record rather than adding the same deposit as new income. The income has already been recorded through the invoice and payment.

What if you take a partial instant payout?

A partial instant payout can make this process more complicated because the amount transferred may not line up with a complete client payment.

For that situation, use the processor’s payout records and ask your bookkeeper or QuickBooks support how to record the split. Don’t assume you need to delete the original client payment and replace it with two payments.

The client payment and the processor’s payout are separate events, and your records need to reflect both accurately.

The checklist I keep in my weekly finance task

Once I understood the process, I put a checklist in my weekly finance task so I wouldn’t have to remember every step:

• Confirm that client payments are recorded once.
• Review the payouts that reached my bank.
• Record each deposit using its payout details.
• Include deducted processing fees.
• Match the recorded deposits to the bank transactions.
• Review older items still sitting in Undeposited Funds.

Some payments may legitimately remain there while a payout is pending. The goal is to account for each payment and deposit, rather than force the balance to zero.

If you have years of old entries, get help reviewing them before creating deposits. Some may already be recorded elsewhere, and adding them again could duplicate your records.

One small task made the whole process make sense

I knew how to send an invoice, collect a payment, and connect Dubsado to QuickBooks.

What I didn’t know was how to finish the bookkeeping process after the payment synced.

Once someone explained the bank bag analogy and showed me the deposit step, I finally understood what I was looking at.

If you’ve been puzzled by Undeposited Funds too, I hope this saves you some of the head-scratching I went through. And if something doesn’t match, booking a help appointment may be much more useful than spending another afternoon trying to figure it out alone.

This post shares my experience with QuickBooks Online, Dubsado, and Stripe. Your bookkeeping process may differ depending on your integrations and payout setup. (It also should DEFINITELY not be construed as bookkeeping advice, because I am not a bookkeeper.