Bookkeeping undeposited checks

When you accept a check for an invoice payment, but don’t deposit it until a later date, the payment should be recorded to a Money in Transit account. This ensures the invoice is marked as paid on the correct date and your bank statement reconciles.

A Money in Transit account tracks the funds that are expected to be deposited into or withdrawn from a bank account at a future date, usually within a few days. Examples of this are credit card sales that have been processed but have not yet been deposited into your bank, or checks (written or received) that have not been deposited into or withdrawn from your bank account.

Add a Money in Transit account

  1. On the left-side menu, click Accounting > Chart of Accounts.
  2. Under the Assets tab, scroll down to the the Money in Transit section, then click Add a new account at the bottom.
  3. Name the account Check Clearing or Money in Transit.
  4. Click Save.

Record undeposited checks to the Money in Transit account

Let’s say a client pays you by check on March 31st, and you deposit the check on April 2nd. Although the invoice is marked as paid in March, by the time the check clears and posts to your bank account, it’s April. Here’s how to record it:

  1. When you receive a check for an invoice payment, apply the payment directly to the invoice on the Invoices page. Select the Money in Transit account that you created, as the payment account. Learn how to record a payment on an invoice.
  2. When you deposit the check, and the deposit transaction is imported, categorize the deposit as a Transfer from Bank, Credit Card, or Loan and select the Money in Transit account from the dropdown menu. Learn how to categorize transactions.

This will leave you with three transactions: the original invoice payment recorded to Money in Transit, the imported transaction, and a Wave-created transaction called Created Transfer to record the funds moving between accounts.