Deposits

Receiving customer payments and depositing them to bank accounts.

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Deposit Flow Overview

Deposit Flow
─────────────────────────────────────────────────────────────────

┌─────────────────┐     ┌─────────────────┐     ┌─────────────────┐
│    CUSTOMER     │     │  UNDEPOSITED    │     │      BANK       │
│    PAYMENT      │ ──▶ │     FUNDS       │ ──▶ │    DEPOSIT      │
│                 │     │                 │     │                 │
│  GL: A/R → UF   │     │  (Holding)      │     │  GL: UF → Bank  │
│  A/R Cleared    │     │                 │     │  Cash ↑         │
└─────────────────┘     └─────────────────┘     └─────────────────┘

UF = Undeposited Funds

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Step 1: Customer Payment

Receive payment from customer against open invoices.

What Happens

Action	Result
Create payment	Payment record saved
Apply to invoices	Invoices marked paid
Payment method	Check, Cash, Credit Card, etc.
Status	Customer A/R reduced

Creating Customer Payment

Customer Payment Creation
─────────────────────────────────────────────────────────────────

Customer Payment #CP-001
├── Customer: ABC Company
├── Payment Amount: $1,500
├── Payment Method: Check #12345
├── Applied To:
│   ├── Invoice #INV-001: $1,000 (full)
│   └── Invoice #INV-002: $500 (full)
└── Deposit To: Undeposited Funds

Result:
  - Customer A/R reduced by $1,500
  - Undeposited Funds increased
  - Invoices marked as Paid

GL Impact

Account	Debit	Credit	Why?
Undeposited Funds	$1,500		Payment received, waiting deposit (Asset ↑)
Accounts Receivable		$1,500	Customer paid their balance (Asset ↓)

Customer Payment GL Explained
─────────────────────────────────────────────────────────────────

Before Payment:
  A/R = $1,500 (customer owes you)
  Undeposited Funds = $0

After Payment:
  A/R = $0 (debt cleared)
  Undeposited Funds = $1,500 (check in hand)

Think: "Customer's IOU → Check in your drawer"

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Step 2: Bank Deposit

Group multiple payments into a single bank deposit.

What Happens

Action	Result
Create deposit	Deposit record saved
Select payments	Payments included
Bank account	Destination account
Deposit date	When deposited

Creating Bank Deposit

Bank Deposit Creation
─────────────────────────────────────────────────────────────────

Bank Deposit #DEP-001
├── Bank Account: Operating Checking
├── Deposit Date: 2024-01-15
├── Payments Included:
│   ├── CP-001: $1,500 (ABC Company)
│   ├── CP-002: $800 (XYZ Corp)
│   └── CP-003: $1,200 (123 Inc)
└── Total Deposit: $3,500

Result:
  - Bank account increased
  - Undeposited Funds cleared
  - Matches bank statement deposit

GL Impact

Account	Debit	Credit	Why?
Bank Account	$3,500		Money now in bank (Asset ↑)
Undeposited Funds		$3,500	Payments deposited (Asset ↓)

Bank Deposit GL Explained
─────────────────────────────────────────────────────────────────

Before Deposit:
  Bank Account = $10,000
  Undeposited Funds = $3,500

After Deposit:
  Bank Account = $13,500 (+3,500)
  Undeposited Funds = $0 (cleared)

Think: "Check in drawer → Money in bank"

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Direct Deposit (Skip Undeposited Funds)

For immediate deposits, skip the holding account:

Direct Deposit Flow
─────────────────────────────────────────────────────────────────

Customer Payment
├── Deposit To: Bank Account (not Undeposited Funds)
└── Result: One-step process

GL Entry:
  Bank Account      $1,500  Dr  ← Money straight to bank
  A/R                       $1,500  Cr  ← Customer paid

Use when:
  - Single payment deposits
  - Electronic payments
  - Credit card batches

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Other Deposit Types

Cash Sale Deposits

Cash sales automatically increase bank (or Undeposited Funds):

Cash Sale Deposit
─────────────────────────────────────────────────────────────────

Cash Sale → Undeposited Funds → Bank Deposit

Same flow as customer payments, but:
  - No prior invoice
  - No A/R clearing
  - Revenue recognized at sale

Other Deposits

Non-customer deposits:

Other Deposit Types
─────────────────────────────────────────────────────────────────

Interest Income:
  Bank Account      $50  Dr
  Interest Income       $50  Cr

Refund Received:
  Bank Account     $200  Dr
  Expense/Vendor Credit  $200  Cr

Owner Contribution:
  Bank Account   $5,000  Dr
  Owner's Equity       $5,000  Cr

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Payment Methods

Check Payments

Check Payment Flow
─────────────────────────────────────────────────────────────────

Customer writes check
         │
         ▼
Record customer payment (Undeposited Funds)
         │
         ▼
Group with other checks
         │
         ▼
Create bank deposit
         │
         ▼
Take to bank (physical or mobile deposit)
         │
         ▼
Wait for check to clear (1-5 days)

Credit Card Payments

Credit Card Payment Flow
─────────────────────────────────────────────────────────────────

Customer pays by card
         │
         ▼
Record payment (method: Credit Card)
         │
         ▼
Payment processor batches
         │
         ▼
Funds deposited to bank (1-3 days)
         │
         ▼
Fees deducted by processor

ACH/Electronic Payments

ACH Payment Flow
─────────────────────────────────────────────────────────────────

Customer initiates ACH
         │
         ▼
Bank receives ACH (1-3 business days)
         │
         ▼
Record customer payment
         │
         ▼
Can deposit directly to bank account
(no physical deposit needed)

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Quick Reference

Deposit Transactions

Transaction	Undeposited Funds	Bank Account
Customer Payment	↑	—
Bank Deposit	↓	↑
Direct Payment	—	↑

Common Issues

Issue	Cause	Solution
Payments not showing for deposit	Already deposited	Check deposit history
Deposit doesn't match bank	Wrong payments selected	Review and correct
Undeposited Funds balance	Payments not deposited	Create deposit
Bounced check	NSF	Reverse payment, contact customer

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Next Steps

• Payments - Vendor payments
• Reconciliation - Bank reconciliation