If you’ve ever hesitated to use the Deposit box at the bottom of your QuickBooks Online (QBO) invoice, you’re not alone. It previously caused issues and was not functioning correctly. But now, after being quietly fixed, it works as intended and can streamline your bookkeeping process.

In this post, I’ll walk you through how to enable and use the deposit feature, explain what’s happening in the background, and show you how it reflects across your customer records and bank feed.

Watch the full video here: https://youtu.be/8_ZkYX_9HfM?sub_confirmation=1

What’s New with the Deposit Feature in QBO?

QuickBooks Online has rolled out a functioning deposit box on invoices that allows you to record upfront or partial payments directly on an invoice. This eliminates the need for separate payment entries and reduces the chance of errors.

Previously, using this field could create issues with reconciliation and reporting. Now, it correctly reduces the outstanding balance owed and properly flows through your bookkeeping records.

How to Enable the Deposit Box on Invoices

To activate this feature:

1. Open a new invoice.
   
   
2. On the right-hand side, select Manage under Payment Options.
   
   
3. Toggle the Deposit feature on.
   
   
4. Choose where deposits should be posted:
   
   
   
   • Your business bank account, or
     
     
   • Undeposited Funds (recommended for most users for easier reconciliation).
     
     

This setup ensures that your upfront payments are handled consistently and accurately.

How to Record a Deposit on a Customer Invoice

After enabling the feature:

• Fill in the invoice details with your products or services.
  
  
• Scroll to the bottom and enter the deposit amount you’ve received from the customer.
  
  
• Save the invoice.
  
  

The deposit will immediately reduce the open balance and be recorded under your selected account.

What Happens Behind the Scenes

The transaction journal entry for the invoice will now show:

• The full invoice amount recorded as Accounts Receivable.
  
  
• The deposit amount posted to Undeposited Funds or the selected bank account.
  
  
• The remaining balance due is automatically adjusted.
  
  

This keeps your books clean and reduces the risk of overreporting income or duplicating transactions.

Viewing in the Customer Center

In the Customer Center, the invoice will show as Partially Paid. The deposit will be clearly listed, and the customer’s balance will reflect the reduced amount owed. This makes follow-ups easier and provides a clearer view of what has been collected and what remains outstanding.

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Matching in the Bank Feed

Once the customer’s deposit hits your bank account:

• QuickBooks Online will show it in the Bank Feed.
  
  
• You’ll be able to match it to the invoice deposit previously recorded.
  
  

This ensures everything is reconciled correctly and eliminates the need for manual matching or adjustments.

Best Practices

• Use Undeposited Funds if you often collect payments by cash or check, or if you batch deposits before taking them to the bank.
  
  
• If you collect deposits regularly, consider setting up default deposit amounts or creating templates for common use cases.
  
  

The deposit box on QuickBooks Online invoices is finally functioning properly and offers a smoother way to handle upfront and partial payments. It’s a small improvement with a big impact on workflow, especially for businesses that collect deposits before delivering goods or services.

This feature now supports accurate reporting, better customer records, and easier bank feed reconciliation.

Watch the full video here: https://youtu.be/8_ZkYX_9HfM?sub_confirmation=1

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– Kerry

My Cloud Bookkeeping

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Book a call with me anytime: www.mycloudbookkeeping.org/consultation

Cheers,

Kerry

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Hi Kerry here from My Cloud Bookkeeping. I work with small business owners and entrepreneurs and help them to utilize QuickBooks online to keep their business bookkeeping up to date and make accurate up to the minute decisions to manage their business finances. If you receive a deposit or partial payment, when you issue an invoice to your customer, you can now record it directly on the invoice.

Now, you may have mo noticed a deposit box on the bottom of your invoice form. Previously, this did not work well and I had advised you not to use it, and now it's fixed. The deposit box has been rolled out as a new feature. This video will walk through how to turn it on and show you how the entries are posted and what it looks like in both the customer center and how to match the funds that are received to the bank.

Okay, so I'm gonna pop up here and say new. Invoice and ignore the AI assist for now. I've got a different video talking about that. I'm gonna pop up here. So we have manage is what pulls up this, uh, right hand side. So we wanna go to manage if it doesn't come up automatically, and then select payment options.

Now you can see here deposit is new. It's not actually new. They've just fixed it. So I'm gonna say yes, I'm turning on the deposit function and then I need to manage it. So when I manage it, I can set up a default deposit amount, or maybe it's a deposit amount for this invoice. I don't know, I'm not gonna do that.

I'm gonna enter it directly in a moment and I'll show you how payment method is optional. Uh, you can select any of these things from the dropdown, but because it's optional, I'm not going to do anything but deposit two. Now this is important. You're either going to select your checking your savings, or whatever bank account you have set up.

Or undeposited funds. I like undeposited funds because that way it doesn't matter which account it ends up in, it should match and you're less likely to make a mistake. So now pop across here to the invoice and, uh, let's see, who am I gonna, let's go with Amy's Bird Sanctuary. Today I'm gonna go back to Amy's and I really do like these rock fountains.

I'm going to get some rock fountains, and to make it worthwhile getting a deposit, we'll sell 50 of them. How's that? That's, that's quite a lot. And then we'll add in some concrete too. Whoops. Concrete would be great if I could spell concrete. Here we go. Um, let's see. We've got $1,500 worth of concrete. I'm gonna take the tax off because I don't like Overco, overcomplicating these things.

I'm gonna scroll down and we have the option here for deposit. So we might be going to ask Amy for a $5,000 deposit because you know, this is a big job. We wanna make sure we've got the money to buy our concrete and the rock fountains before we do the work. So we enter this deposit in here and I'm gonna save it so that I can show you the journal entry.

Now if you're the sort of person that's like, oh my goodness, I don't wanna see a journal entry, just either fast forward a little bit or bear with me 'cause I think it's kind of handy to see. So I'm gonna pop here to the transaction journal and I'll show you what's happened.

We've got sales of $13,750. The cost of goods sold is all coming out of inventory and things. Don't worry about that so much. But what I really want to show you is that the accounts receivable and the undeposited funds here are the two things that add up together. So what it's showing me is that the amount that's gonna show up for Amy in your.

AR is going to be reduced by this amount that's in undeposited funds. Now, if that was totally double Dutch to you, that's okay. I'm gonna pop across and show you in the customers section where it might make a little bit more sense. So if we look at Amy's Bird Sanctuary here, I'm gonna click on Amy. You can see there's an overdue payment of $239.

That has nothing to do with us. Plus the amount that we have. This is the transaction that we've just put in. So you can see that the amount of the invoice is 16,470. It's partially paid. 11,470 is due, so that deposit has reduced the amount that Amy owes us. Now I'm gonna pop up here to the bank deposit, new bank deposit.

And you can see this 5,000 we collected from Amy. It's waiting to be deposited. So when we put the transaction in the bank, when we update our bank feed, sorry, and that 5,000 comes in, or if it's part of a larger deposit, we'll be able to match that directly from the bank feed. And then everything now works.

The way the deposit was before didn't work, and I used to suggest that you didn't use it. So now it's safe to turn it on and it works beautifully. Hopefully that all made sense. It's a much easier way to record any payments received at the time of invoicing and the balance remaining is clear and easy to follow up with.

So be sure to like, subscribe and ring that little bell because as I have more QuickBooks tips and rollouts, I'll be making new videos and as always, I would love to hear from you. Cheers.