What are Uncollected Funds?

Uncollected funds refer to the balance of uncleared checks in a bank account.

How Do Uncollected Funds Work?

When an account holder deposits a check into a savings or checking account, the bank must collect the specified amount of cash from the check writer's bank account. This collection takes place during a bank's clearing cycle, which may occur once or twice each business day.

Uncollected funds are the portion of the account balance that includes check amounts that have not yet cleared. For example, if an account holder deposits a check for $100, the $100 represents uncollected funds until the check clears.

Why Do Uncollected Funds Matter?

The difference between the total balance and the available balance of a checking account reflects the amount of uncollected funds. A check does not clear until the credit to the account holder's ledger balance is matched, or reconciled, with a similar debit from the check writer's account.