Cheque Cancellations

Suggested methods of handling various cancellation situations:

1.  Cheque Cancellation

Scenario: A cheque has been drawn with PAYG Tax deducted but the cheque has gone astray and must have a Stop Payment put on it and a new cheque issued.  The same basic approach applies to cheques without deductions.

a.  locate the correct PAY transaction in Posting - Edit Transactions

b.  the PAY transaction and the following two INV transactions should be "selected" and deleted; the two INV transactions are the deduction (negative invoice) from the Creditor and a positive invoice payable to the Tax Office relating to the PAYG deduction

c.  the act of deleting the PAY transaction removes the "Close #" (close number) from the INV transaction/s; the purpose of the close number is to signify whether an invoice has been paid and reflects the transaction number of the PAY transaction relating to the INV

d.  to issue a new cheque go to the Payments screen, click on the "Edit" drop-down menu and select "Cancel Cheques" and key in the number of the cheque which was cancelled and deleted (as per the above steps); this accounts for the cheque number for control purposes

e.  also in the Payments screen, click on the "File" drop-down menu and select "Refresh Suppliers" to reset the INV transactions for payment (if necessary); then "Tag" the invoices to be repaid and process the payment with the new cheque number

2.  as above, but the ATO has been already paid the PAYG Tax

Scenario: A cheque was raised for a Subcontractor and needs to be cancelled and reissued, however the ATO has been paid the PAYG Tax relating to the original cheque.

a.  the original invoices must be reversed and the payment reversed (these will be negative values); ensure that the dates and details of the entries are identical to the original transactions

b.  re-post the original invoices and pay these through the Payments screen with the new cheque number

3.  to Refund PAYG Tax or other deduction wrongly applied

Scenario: A cheque has been drawn but the deduction was greater than it should have been.  The Creditor has banked the original cheque and wants a cheque for the difference.

a.  locate the correct PAY transaction in Posting - Edit Transactions

b.  the PAY transaction and the following two INV transactions should be "selected" and deleted; the two INV transactions are the deduction (negative invoice) from the Creditor and a positive invoice payable to the Tax Office or another party e.g. Superannuation Fund

c.  alter the Pay Deductions in the Supplier screen for that Supplier/Creditor if necessary for future payments

d.  to issue a new cheque go to the Payments screen, click on the "File" drop-down menu and select "Refresh Suppliers" to reset the INV transactions for payment (if necessary); then "Tag" the invoices to be repaid and process the payment with both the original and the new additional cheque number as the reference (if space is not sufficient then record the new cheque and enter both numbers in Comments); write a manual cheque for the balance to be paid (obviously you will need to aware that the PAY entry represents two cheques when doing a Bank Reconciliation)

4.  Alternative to 3.

a.  post a positive invoice coded to the Supplier for the shortfall with exactly the same details as the original system generated invoice.  Then post a negative invoice to the ATO or Super Fund, once again with the identical details to its original system generated invoice.

b.  then draw a cheque for the new shortfall invoice payable to the Supplier

n.b. in all cases the "Comments" field (50 characters) can be used to describe your action