Undeposited Funds and Square Sync Issue

Thanks for turning to Community, Rliss.

I appreciate every detailed information you provided.

You have the option to correct your Undeposited Funds balance using a journal entry. Before doing so, I recommend consulting an accountant for guidance on what accounts to be used and for more expert advise on how to handle this type of situation.

Here's how to create a journal entry:

1. Go to the Gear icon/ Plus (+) New.
2. Select Journal Entry.
3. Fill out the fields to create your journal entry.
4. Select Save and close.

Check out the video tutorial in this article to learn more about Journal Entry (JE): Create a journal entry. 

Once done, create a Bank Deposit and select the Journal Entry and the transaction to zero out the balance.

1. Go to the Gear icon/ Plus (+) New.
2. Choose Bank Deposit.
   
3. Under Select the payments included in this deposit section, check the boxes for JE and it's equivalent transaction.
4. Click Save and close.
   

You can always visit us again if you have follow-up questions. It's always my pleasure to help. Have a great day ahead!

Hello all, I have the same issue and my undeposited amount is higher than 12k. Has anyone been able to fix this before we have to file for taxes in 2020? 

I have read this entire post, and have found the issue that is happening in QuickBooks.  I help manage a small retail business, and maintain the QuickBooks file.  When you are using Square, it is an issue either created by them, or by QuickBooks when the transactions are being downloaded from Square to your bank account, and then your bank account to QuickBooks.  We record an invoice for all sales.  However, a customer is only required to pay a 50% deposit, leaving the other 50% for when the product(s) are picked up or delivered, which often is not in the same month.  The whole issue is this: Square does not provide a "Payment Date" in its "Add a Payment" function which attaches to the invoice being paid.  What this causes is for the payment to be posted to QuickBooks on the date of the invoice and not the date of the payment.  This then causes a mismatch of the Monies being deposited, and creates what is called a "Square Non-Matching Payment" to be generated either by Square or QuickBooks, so that the Deposit downloaded is balanced out in the detail, and this Square Non-Matching Payment is being posted to Square Income, when it is in reality a payment for an invoice that was posted in a previous month.  I tracked an invoice and it's payments to the Square Sales, Deposits, Receivables and Undeposited Funds, and the invoice is only recorded once, the payments are only recorded once, but for some reason the payment made after the initial invoice date is not being assigned a date in the current period in which it was paid, and thus it cannot be matched to the invoice because it is being posted to a prior period, thus relieving the invoice and creating an inability to match the payment to the deposit, so Square or QuickBooks generates the Square Non-Matching Payment to balance the transaction when entered to QuickBooks.  The situation, in my opinion is occurring, because Square does not provide a data entry field for the date a payment is received, and thus when it is posted to QuickBooks, it is being posted on the Invoice Date instead of the payment date, thus causing the mismatch.  Because of this post being created to balance the deposit, it is being posted to income as a credit, when it should be posted to Undeposited Funds because it represents a payment received on a prior invoice that was credited to the wrong period.  Thus, your accounts receivable, income and undeposited fund accounts are always changing in prior periods because of payments being received in the current period.  The issue resides in a miscommunication of Square and QuickBooks, in that Square does not supply the proper payment date, and QuickBooks is not equipped to handle this error on Square's part.  The reason I know this is true is because "Deposits" should never be posted to Square Income when you have already generated an invoice, thus your income is overstated by all of these "Deposit" postings labeled as a "Square Non-Matching Payment."  We are notifying both QuickBooks and Square of this issue, and asking Square to create a "payment date" field when adding a payment, to properly identify the right date to QuickBooks for matching purposes, so that this Non-Matching Payment will not be created in error.  This is a systemic problem with Square and QuickBooks.  The funny thing is, when you look at the detail of any deposit in the "Transfers" detail section of Square, you can see the actual payment date is recorded on the date you received the payment, but it is not used in transferring the data to QuickBooks through your banking transactions when they are downloaded.  If I had to hazard a guess, this is a problem on Square's end, but can be easily fixed by a journal entry, monthly, to remove all transactions labeled "Deposit" in Square Income to Undeposited Funds, as the invoice has been closed and shows as being paid in full in QuickBooks.  This problem on Square's end messes up your Accounts Receivable, Undeposited Funds and Sales, because your bank downloads the correct deposit total, and thus the bank reconciles, but it mismatches the payments because it uses the invoice date because it is not programmed to use the payment date for payments received.  Your financial statements thus are always in a state of flux because of this error, as A/R will change in a prior period due to the improper use of the Invoice Date to identify a payment posted instead of a Payment Date, especially if you are receiving payments after the original invoice date.  This is also why you cannot void a check directly in QuickBooks in a prior year, because it will use the wrong date to void the check.  It is an identical issue of not assigning the proper date to a transaction.