This guide explains how to account for checks that have not yet cleared the bank using the Undeposited tab in the Bank Reconciliation module. It covers both sides of the transaction: checks you issue to vendors (outgoing) and checks you receive from customers (incoming).

For outgoing checks, the process uses the Outstanding Checks G/L account as a holding account until the check clears. For incoming checks, the process uses the Undeposited Funds G/L account until the funds are deposited into your bank account.

User can create their own G/L accounts for Outstanding checks and Undeposited funds. It is crucial to use:

• account category Liabilities and subcategory Post Dated checks for Outstanding checks;
• account category Assets and subcategory Undeposited funds for Undeposited funds.

Use the Check/Ref # and Check/Ref Date fields to enter the basic details of the check, while the Memo field is used for additional information not covered by the standard fields.

For the BUYER (Issuing a Check) #

At the time of check issuance:

• Record the payment in the payment document.
• As the G/L (payment) account, select your regular Bank Account.
• At the time of Bank reconciliaion, if the check has not yet cleared, open the original payment document, edit the document and change the G/L account from the Bank Account to the Outstanding Checks account.
• The check will appear on the Undeposited tab in the Bank Reconciliation module.

This creates the following transactions in the General Journal:

• Debits: Accounts Payable
• Credits: Outstanding Checks (G/L holding account)

In the next Bank Reconciliation, when the check clears:

• Create a Bank transfer document to resolve the Outstanding check balance and decrease the Bank account balance.
• In the bank reconciliation so that the check is no longer shown as outstanding on the Undeposited tab.

This creates the following transactions in the General Journal:

• Debits: Outstanding Checks (G/L holding account)
• Credits: Bank account

While the Undeposited tab is not yet available in the Bank reconciliation, please use the Bank reconciliation report to track the open checks – Section 4 Post Dated Checks.

This approach allows you to track outstanding checks separately in the general ledger until they clear the bank.

For the SELLER (Receiving a Check) #

When you receive a check, you have an asset that you cannot deposit immediately. Hold it in the “Undeposited Funds“ G/L account.

Create a Sales Invoice: Record the sale as you normally would.

1. Receive Payment with a check:
   • Go to Cash Receipt document.
   • Select the customer and invoice.
   • As the G/L account, choose “Undeposited Funds“ instead of your regular Bank account.
   • Enter the check details (check number, future date) in the Check/Ref # and Check/Ref Date fields.

This creates the following transactions in the General Journal:

• Debit: Undeposited Funds (records the asset of the held check)
• Credit: Accounts Receivable (clears the customer’s debt)

On the Check’s Date When You Deposit It:

• Move the funds from “Undeposited Funds“ to your bank account using the Deposit document:
  • Select the Cash Receipt or Cash Sale documents in a lines from “Undeposited Funds” that you are now depositing (the check that has matured).
  • Deposit them into your actual Bank Account.

This creates the following transactions in the General Journal:

• Debit: Bank Account (increases your cash)
• Credit: Undeposited Funds (decreases the held funds asset)

While the Undeposited tab is not yet available in the Bank reconciliation, please use the Bank reconciliation report to track the open checks – Section 3 Undeposited funds.

Summary Workflow #

Role	Action	Document in AccountingSuite	G/L Account Used
Buyer (Issuer)	Issue a check to a Vendor	Bill Payment	Outstanding Checks (as the payment account)
Buyer (Issuer)	Clear the check on its date	Bank Transfer	From: Bank Account To: Outstanding Checks
Seller (Receiver)	Receive a check from a Customer	Cash Receipt	Undeposited Funds  (as the deposit account)
Seller (Receiver)	Deposit the matured check	Deposit	From: Undeposited Funds To: Bank Account

By following this process, you ensure that checks are properly tracked in your accounting records without distorting your actual bank balance until the payment is legally due. Use the Check/Ref # and Check/Ref Date fields to enter the basic check details (number and future date), while the Memo field is used for any additional remarks. These fields – Check/Ref # and Check/Ref Date can also be used as a reference during Bank reconciliation and Import Bank Transactions processes.