Understanding Undeposited Funds
The real mechanics of the "waiting area" for card and other payments before they're confirmed at the bank.
Understanding your accounts introduces this in plain terms as a waiting area for a payment before it's confirmed at the bank. This page covers the real mechanics.
Why it exists
When a customer pays by card (or by any method that doesn't land straight in a specific Cash or Bank account you chose), BusinessCopilot doesn't guess which of your accounts to credit. Instead, it automatically posts the payment to a real, system-managed account called Undeposited Funds — this models reality: a card payment genuinely hasn't reached your bank account yet, since your payment provider typically batches several payments together before depositing them, often a day or more later.
Undeposited Funds is created automatically the first time it's needed — it's a real account (code 1005 on the Chart of Accounts), but it doesn't allow manual journal posting and doesn't appear on the New Account form under Cash & Banks — you never create or choose it yourself, only BusinessCopilot posts to it.
How it resolves
Once your payment provider's actual deposit shows up on your bank statement, go to Cash & Banks → Deposits and batch the matching Undeposited Funds entries into one real deposit against your bank account — see Recording a bank deposit for the steps. Your books then show one lump-sum transaction matching the one lump-sum line on your statement, the same way the deposit really happened.
Checking it's accurate
Treasury Reconciliation cross-checks the real balance sitting in Undeposited Funds against what the Chart of Accounts believes it should be. Undeposited Funds itself reconciles correctly through a deposit — the money moving out of it is fully reflected on both sides.
A real gap worth knowing about: the Bank side of the same check does not currently reconcile after a deposit (or an inter-account transfer). Recording a deposit correctly updates your real account balance and transaction history, but doesn't yet post a matching entry to the Bank ledger account itself — so Treasury Reconciliation's Bank line will show a difference once you've made one. This is a real, known limitation in how deposits and transfers post today, not a sign that your deposit did anything wrong — your account balance and transaction record are correct either way.