Best Practice: Voiding invoices

Stores need precise accounting to ensure profitability and excellent customer service. This includes the ability to track accounts receivable with timeliness and accuracy. However, some circumstances and business processes create a legitimate need to correct transactions that were completed in the past. However, making changes to historical data, if not done correctly and with due diligence, can open the door to further errors.

• Historical reports might be inaccurate.
• External accounting systems can get out of sync.
• Daily Balancing can be off.

Store processes for voiding need to conform to accounting best practices in order to protect stores, preserve accuracy of reporting, and facilitate balancing. Paladin’s Enhanced voiding feature provides this in a simple and elegant solution

Void Feature: Enhanced functionality

With Paladin’s Enhanced Void functionality, Paladin creates a reversing transaction on the day of the void that will ‘undo’ the original transaction, making the customer whole again as well as making your financial records correct. The reversing transaction compensates for the accounting information previously recorded in the general ledger. This increases traceability, accountability, fraud detection.

• Stores may review voided invoices in their full detail.
• Historical reports remain valid after a void.
• Voids of payments on account are not visible to the customer.
• Historical data uploaded to accounting systems is accurate.
• If a credit or debit card was used, Paladin will attempt to send a reversal to the credit card processor. The store should verify with their processor that it was successful.

Enhanced voids are active by default in Paladin. For more information, read the knowledgebase article: Enhanced Voiding invoices

Paladin recommends using the new Enhanced Voiding Invoice functionality.

If you decide Legacy voiding is the option for your store’s accounting practice, the following link takes you to information and instructions on legacy voids: Legacy: Voiding Invoices

Reasons Why you Should Change an Invoice

Here are three examples of legitimate reasons for a Edit\Void, and the best practices for each:

Example 1:

On the 20^th of January, you process a payment on a customer account for $100. That night you run a GL summary report and upload daily activity to your accounting software. You run statements and send them on the 31^st of the month. On the 3^rd of the month, a customer lets you know his statement was incorrect because he made a payment on account on the 20^th. After researching the payment, you discover it was applied to the wrong customer account.

• Best practice is to edit the invoice using the Enhanced Edit/Void feature and apply the payment to the correct customer.
• Invoice date and general ledger remain untouched.
• The invoice will now be applied to the correct customer account and no longer appear on the incorrect customer’s statement. Statements should be run again for both customers as of the 31^st.

Example 2:

A customer is told they will receive a 10% discount on a purchase. They check out and the next day they return after realizing the discount was not applied at checkout.

• Best practice is to void the original invoice using the Enhanced Edit/Void feature and issue a new invoice with the 10% discount.
• A reversing transaction is automatically created today that will ‘undo’ the original transaction, compensating for the accounting information previously recorded in the general ledger.
• If a credit or debit card was used, Paladin will attempt to send a reversal to the credit card processor. The store should verify with their processor that it was successful.
• The compensating transaction will appear on the Transaction Report and the GL Summary report to ensure accurate financial records. However, the original and compensating invoices are both filtered out of the automatically generated customer statement.

Example 3:

A customer from a non-profit organization makes a purchase and sales tax is included on the invoice. Later the customer provides documentation showing they are exempt from sales tax.

• Best practice is to void the original invoice using the Enhanced Edit/Void feature and issue a new invoice with the correct sales tax.
• A reversing transaction is automatically created today that will ‘undo’ the original transaction, compensating for the accounting information previously recorded in the general ledger.
• If a credit or debit card was used, Paladin will attempt to send a reversal to the credit card processor. The store should verify with their processor that it was successful.
• The compensating transaction will appear on the Transaction Report and the GL Summary report to ensure accurate financial records. However, the original and compensating invoices are both filtered out of the automatically generated customer statement.

Whether you use legacy voids or enhanced voids, Paladin is always available to help.