In NetSuite, Undeposited Funds is a temporary holding account. Payments received from customers are first stored here until they are grouped and deposited into a bank account. This ensures that the deposits in NetSuite match the actual deposits reflected on the bank statement.
Why Undeposited Funds is used
- Payers payments post to Undeposited Funds until they are deposited
- This process mirrors how payments are physically grouped by the bank
- It prevents mismatches between NetSuite and your bank statement
Example workflow
A customer payment is processed through Paystand
NetSuite records the payment in the Undeposited Funds account until the funds are clear
When the batch deposit is created, funds move from Undeposited Funds to the selected bank account
This matches the grouped deposit on your bank statement
Why can’t I change it to a bank account?
- The Undeposited Funds account is essential for reconciliation
- When a Paystand Transfer arrives, NetSuite matches it against transactions (payments, refunds, etc.) in Undeposited Funds to create the deposit
- If transactions are posted directly to a GL bank account, they won’t be visible during reconciliation, causing deposit creation to fail
- From an accounting best practices perspective, Undeposited Funds is designed for this purpose and is a key part of the integration flow
Tips
- Review the Undeposited Funds account regularly to ensure all payments are deposited
- Always reconcile deposits against your bank statement for accuracy
- If deposits are missing, check whether payments are still in Undeposited Funds