Bank deposits you cannot trace to a donor
What to do with deposits nobody can link to a donor, funder or invoice: hold them apart, explain them, chase them, and post them once identified.
By Achekam · · 5 min read · For Non-profit businesses in South Africa, Nigeria, Kenya
Every non-profit's bank statement eventually shows a deposit nobody can explain. The reference is blank, or reads only "PAYMENT", or carries a name no one in the office recognises. The amount is not a round number that matches a pledge, and no funder has announced a tranche.
The tempting response is to call it a donation and move on. It is money in the account, after all, and the month needs closing. But an unexplained deposit is not necessarily yours, and treating it as income can create problems that are much harder to undo than a few weeks of patient investigation.
This article explains why unidentified deposits deserve care, and a routine for handling them in Achekam without holding up your month end.
Why an unexplained deposit is a risk
An untraced deposit could be any of several things, and most of them need action:
- A real gift from a donor who forgot the reference. They deserve a thank-you and possibly a receipt, and they may give again if they get one.
- A grant tranche with an unfamiliar reference. It belongs in the grant's own accounts, not general income.
- A payment meant for someone else. A supporter or business may have used the wrong account details. That money must go back.
- A refund or reversal from a supplier or a bank.
- A warning sign. An unexpected deposit followed by a request to refund it to a different account is a well-known pattern of fraud. Treat any such request with suspicion and refer it to your finance lead.
Booking all of these as donation income would overstate your income, could mean keeping money you must return, and hides the one case where something is wrong.
Leave the line unmatched while you find out
In Achekam, bank lines are matched by suggestion and a person accepts each match. A line not yet in the books becomes a suggested journal that a person approves. Nothing is posted until someone accepts it.
That means the honest first step is to do nothing in the books. Do not accept a match or approve a journal for a deposit you cannot explain. Instead, start finding out:
- Look at the full statement detail, not only the summary line. Some banks show more of the payer's details on the statement than in the import.
- Ask the fundraising and programme teams whether anyone was expecting money.
- Check recent pledges, event bookings and funder correspondence for the amount.
- Ask your bank whether it can give you more information about the payer.
Make sure the statement itself is complete before you go further. Statements are imported as PDF, CSV, Excel, OFX, QIF, MT940 or CAMT.053 files, and each import is checked so that the opening balance plus the movements equals the closing balance. An apparent mystery deposit is sometimes the duplicate of a line from a statement imported twice.
Explaining leftover lines so the reconciliation completes
A bank reconciliation in Achekam completes only when there is no difference left, or when every leftover line is explained. So an unidentified deposit does not stop you from completing the reconciliation, provided you explain it.
Write a clear explanation for the line: the date, the amount, what you have checked so far and who is investigating. "Unknown" is not an explanation. "Unidentified deposit; programme and fundraising teams asked; bank query raised" is.
AccountingTools' guide to the bank reconciliation process walks through comparing your cash records with the bank statement and adjusting the books, which is exactly where unexplained items surface.
Before the month closes
Months can be soft-closed, hard-closed and locked, and before closing, the screen checks that no posting suggestions, unposted bills or unmatched bank lines are waiting. An unidentified deposit cannot simply sit unmatched forever if you want to close the month.
If the investigation is still open at month end, a common approach, to agree with your accountant, is a holding account:
- Add a liability account such as "Unidentified receipts". Accounts can be added, renamed or switched off.
- Approve the deposit into that account, not into income.
- The money is now in the books, but as something you hold, not something you have earned.
The balance on that account becomes your list of deposits still to resolve. It should be small and it should turn over; a balance that grows month after month is a sign the routine is not working.
Posting it once you know
When you find out what the deposit was, move it out of the holding account with a manual journal into the right place: donation income for the right fund, the grant's own account, or a liability if the money must be returned. Record what you found in the journal's description.
If the deposit was posted directly to the wrong account before anyone realised, correct it the proper way. A posted journal is corrected only by reversal, and one dated in a closed month is refused, so reverse it and post the correct entry in the current month.
If the money belongs to someone else, return it to the account it came from, not to any other account someone asks you to use, and keep the correspondence.
A monthly routine for deposits nobody recognises
- At each reconciliation, list every unidentified deposit with its date, amount and reference.
- Assign each one to a named person to investigate.
- Review the list at the monthly finance meeting, and age it: how long has each been open?
- Agree with your board or accountant what happens to deposits still unidentified after a long period.
- Report the holding account balance in your management accounts, so the board sees it.
Grant tranches with unfamiliar references are covered in recording a grant tranche that arrives in the bank, and the wider set of month-end checks in what to check before closing a month. If a deposit looks linked to unusual buying activity, spotting warning signs in purchasing is worth reading.
Look at your last three bank reconciliations today and list every deposit that was booked as income without anyone knowing who sent it.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
