How to reverse or void a payment or invoice posted with prepaid terms in Accounts Payable

Invoices paid with check or EFTs ▼

In the AP menu, select Checks, Void Payments, and click Void Payments by Vendor (or Void Payments by Cash Account).
Void the check or EFT payment to reopen the invoice.
To void the invoice, go to AP, Invoices, Credit Memos.
- Post a Credit Memo for the full amount of the invoice
- For the G/L distribution account, select the original distribution account from the invoice
- Then select Post.

Invoices paid with cash ▼

If the invoice does not need to be voided ▼
1. Select AP, Invoices, Invoices, Enter.
2. Create a new invoice for the vendor and select the appropriate term. (Do not use "Prepaid" term).
  - Because A/P does not allow duplicate invoice numbers. a new invoice number will need to be used
3. Distribute the invoice to the G/L cash account where the cash payment was originally posted.
  - This reopens the invoice for the vendor in Accounts Payable
  - In G/L, a credit posts to A/P and a debit posts to the cash account
4. Post a bank transaction without posting to G/L to clear/offset the original cash payment.
  - In the CM menu, go to Transactions and click Enter Bank Transactions
  - For Transaction Type, select Credit. Select the cash account. Enter the amount and date. Deselect Post to G/L. (When reconciling the checking account, clear this transaction and the original cash payment in CM, Transactions, Reconcile Checking Account.)
If the invoice must be voided ▼
- If you do not require any audit trail of the invoice void, post a bank transaction in Cash Management
  1. CM, Transactions, Enter Bank Transaction.
  2. Select Deposit from the Transaction Type list.
  3. Select the cash account and distribute to the expense account used on the original invoice.
    NOTE: This method posts an entry to your bank reconciliation to offset the cash payment as well as updating the G/L
- If you require an audit trail of the voided invoice, post a credit memo and debit memo
  1. Post a credit memo:
    
    AP, Invoices, Credit Memos
    
    Select the vendor, then select the Open Credits radio button in the Apply to area
    
    Distribute to the original invoice distribution account
  2. Post a debit memo:
    
    AP, Invoices, Debit Memos
    
    Select the vendor, then select the Open Credits radio button in the Apply to area
    
    Distribute to the same cash account used for the handcheck
    NOTE: Since the payment cannot be voided 1099 Payment amounts will not reflect this adjustment. When processing 1099s through Enhanced Tax Reporting at the end of the year, manually update the vendor 1099 amounts.
    
    TIP: For future entries, use EFT instead of cash so you have the ability to void the EFT entry