Stripe Holding Account

What are Undeposited Funds?

Undeposited funds (also known as Payments to Deposit) serve as a temporary repository within accounting systems, designed to monitor money received by a business before depositing it into a bank account. Essentially, this account functions as a holding area for payments or receipts awaiting deposit. It proves particularly useful for businesses handling multiple payments throughout a given period, allowing them to consolidate these funds before making a single deposit.

By utilizing Undeposited Funds, businesses streamline the reconciliation process and maintain accurate financial records. Once the funds are deposited, the balance within the Undeposited Funds account returns to zero.

How to choose the Stripe Holding account and trade-offs between using Undeposited Funds and a different asset account

Your Stripe holding account in QuickBooks mirrors your Stripe balance and is accessible through the Stripe Dashboard. For most users, the default choice is Undeposited Funds (or Payments to Deposit), a standard feature of every QuickBooks account.

Undeposited funds creates bank deposits, reconciles easily, and auto-selects sales and payment receipts. Non-UF is accurate on a daily basis but creates transfers instead of deposits, so you have to manually reconcile it. In general, we recommend Undeposited funds for very simple accounts and Non-Undeposited funds for higher volume or more sophisticated users who want to manually reconcile on a regular basis.

Undeposited funds offer automatic reconciliation through a matching deposit on your banking feed, simplifying the process for average users. However, there are limitations to consider:

  • Multiple Accounts Feeding into Undeposited Funds: When various accounts (other payment providers, check payments, etc.) contribute to undeposited funds, it may become challenging to reconcile.
  • Timing Discrepancies: In some cases, timing differences between transactions may hinder daily balance reconciliation between Stripe and QuickBooks.
  • Currency Issues: Currency fluctuations can complicate the use of undeposited funds.
  • Naming Convention Preferences: Some users may prefer a distinct naming convention for their holding account.
  • Manual Payouts: If you manually transfer funds from Stripe to your bank account instead of relying on an automatic schedule.
  • High-Volume Accounts: Accounts with a high volume of transactions may encounter challenges with undeposited funds.

🚧

Other Account

If you opt for an account different from Undeposited Funds to track your Stripe Balance, it's important to make a starting balance entry in the new account that matches your current Stripe Balance. From there, the account should remain reconciled.

Users may opt for an alternative account based on their specific needs and preferences. It's important to note that there's no obligation to choose either method. It ultimately boils down to user preference.

❗️

Switching Accounts

Please be aware that if you switch holding accounts, you'll need to delete all transactions from that account if you decide to switch back to Undeposited Funds.

Undeposited Funds and Stripe Payouts

In the context of Stripe payouts, funds remain within the Stripe balance until a payout occurs. Consequently, QuickBooks reflects these funds as Undeposited Funds. While the account could bear any name, Undeposited Funds or Payments to Deposit are the most common designations within QuickBooks Online.

Ideally, the balance in Undeposited Funds should match the Stripe balance, barring minor discrepancies such as specific fees only visible upon payout. These fees or charges reconcile upon payout into a bank deposit.

We like using Undeposited Funds as our holding account because it helps us make bank deposits and matches transactions on your bank feed. This makes reconciliation quicker and adds more validation than using a Transfer. However, you can pick between Undeposited Funds or another account as your holding account.

πŸ“˜

If Undeposited Funds Account Does Not Exist

New QuickBooks accounts come with Undeposited Funds accounts, but occasionally they might have been deleted or marked inactive. To create an Undeposited Funds account, please review this page (link).

Clearing Refunds Account

As part of our onboarding process, our app will prompt you to establish a Clearing Refunds Account. This account serves the singular purpose of managing negative payouts from Stripe efficiently. Specifically designed for this function, it facilitates the clearance of specific transactions from the Undeposited Funds category in cases of negative payouts, also known as withdrawals or clawbacks, initiated by Stripe.

Rather than recording negative payouts as expenses directly from the Undeposited Funds, we direct them to the Clearing Refunds Account. This strategic approach is necessary because transactions within Undeposited Funds persist indefinitely, remaining visible without resolution. Therefore, to maintain clarity and accuracy, we reassign transactions associated with negative payouts to the Clearing Refunds Account, ensuring a balanced Undeposited Funds ledger.

🚧

Account Balance

Your Clearing Refunds Account should remain at zero at all times unless there is another pending negative payout. If it is not at zero, please reach out to us at [email protected].