How are voided checks handled in a bank reconciliation?

What does voiding a check actually do to the record?

Voiding keeps the check in the books and takes away its amount. In QuickBooks Online, for example, checks are among the expense transactions that can be voided, and a voided transaction stays on record without affecting totals; it shows as zero and marked void. Anyone reading the records later sees check 1045 as void rather than as a gap.

Deleting is different. In QuickBooks Online, a deleted transaction is removed everywhere except the audit log. The number then disappears from the register, and anyone reading the register or the check sequence cannot tell a deleted check from one that was never written without going to the audit log. That is why a check you no longer intend to honor is voided, not deleted. In QuickBooks Online a void also cannot be undone, so confirm you have the right check before you void it.

A stop payment is a third action, and it happens at the bank, not in your books. Under the Uniform Commercial Code, the account holder can stop payment by giving the bank an order that describes the check with reasonable certainty. The bank has to receive it in time to act on it. Voiding changes only your ledger. A stop payment changes only what the bank will pay. When a check has already been delivered, you usually need both.

For the wider question of when to edit, void, delete or reverse a transaction, see the related question below.

Should a voided check appear on the outstanding list at all?

An outstanding check is one that has been recorded but has not yet cleared the bank account. A check that was written and then voided before it went out can never clear. It does not belong on the outstanding list.

Leaving it there understates the bank balance you expect. It also creates a difference that keeps coming back until someone finds the check. How you take it off the list depends on timing:

• Voided in the same period it was written. Once the check is voided, its amount is zero, and it must not be carried forward as an outstanding amount.
• Already carried on an earlier reconciliation's outstanding list. Usually you leave the old reconciliation alone and record the reversal in the current period (see below for the choice and what it changes), then clear the original check and the reversal together.

Does it matter whether the check left the business?

Yes. The book entry is the same, but your exposure is not.

Never released. The check was printed or written but never mailed, handed over or sent. Void it in the books, write "VOID" across the paper check, and keep it. It stays off the outstanding list, and the bank does not need to be told, because no one can present a check you still hold.

Delivered, or its whereabouts unknown. The payee has the check, or it was mailed and never arrived. A void in your books does not tell the bank anything, so the check can still be presented and paid. To stop that, place a stop-payment order with the bank. Under the Uniform Commercial Code, a stop-payment order lasts six months, but an oral order lapses after 14 calendar days unless it is confirmed in a record within those 14 days. It can be renewed for further six-month periods, but only by a record given to the bank while the order is still in force. Ask your bank how it takes the order and what it charges under your account agreement. If the check could still turn up, renew before the order expires, or keep watching every statement for the number.

If you do not stop payment, keep watching every bank statement for that check number. If the original is cashed after you voided it, for example after issuing a replacement, record the payment with a credit to cash and a debit to the account that reflects what it paid, such as an expense or the liability it settled. If the replacement has not been cashed yet, place a stop payment on it at once and void it in the books, or the payee is paid twice. If the replacement has already been cashed, you will need to pursue repayment of the second check with the payee.

Any fee the bank charges for a stop payment is recorded separately and is not covered here.

What happens when the check belongs to a period you already reconciled?

This is the usual case. Most checks get voided because they sat uncashed for weeks or months, so the check often appears on one or more completed reconciliations as an outstanding item.

You have two options for dating the void:

• Date it into the original period. The book balance for that period rises by the check amount, and the reconciliation you completed and signed off no longer agrees with the ledger. Anyone who re-performs it finds a difference with no visible cause. The payables or expense balances for that period change too.
• Record it in the current, open period. The earlier reconciliation stays exactly as completed. The check remains on the outstanding list until the reversal is recorded, and then both come off together.

The second option is usually cleaner. QuickBooks Online's own method for voiding a transaction in another period is a reversing journal entry dated when you want the reversal to show. You reverse the accounts from the original transaction. For a bill payment, that means debiting the bank account and crediting accounts payable. The original check and the reversing entry can then be cleared in the next reconciliation, because together they add up to zero and do not change the balance.

If those figures went to someone else. If the earlier period's figures have gone to a lender, an outside accountant or a tax preparer, the void date decides whether numbers they are relying on change. Dating the void into the current period leaves those numbers alone. Dating it back turns the void into a correction of reported figures, and that decision needs to be made separately first. Whether to reopen a reconciled month at all is a separate decision with its own trade-offs.

What happens to the bill the check was paying?

Voiding the payment brings back whatever the payment settled. That is the point of the operation, and it is where most errors happen.

• The check paid a vendor bill. The void, or the reversing entry, debits the bank account and credits accounts payable, so the amount is owed to the vendor again. Check whether that shows as the original bill reopened or as an open credit against the vendor before you reissue, and apply the new payment to whichever it is. If the vendor is still owed, issue a new payment with a new check number. Never reuse the voided number. If the amount was paid some other way, apply that payment to what is owed.
• The check was recorded directly to an expense, with no bill. The void removes the expense. If the cost is still owed, record the liability or the new payment. Otherwise the expense and the obligation both disappear from the books.
• The check was a duplicate or an error. Here the restored balance is the correction you wanted, so confirm that payables now show what you actually owe.

Voiding a check without dealing with what it paid leaves a payee unpaid with nothing recorded as owing.

How do you keep the check number accounted for?

The voided record is the only remaining evidence that the number was used. If it vanished, a gap in the sequence would look like a missing check rather than a documented void. Keep the voided check visible in the register under its own number, and for each one keep:

• the paper check marked "VOID", or a note that it was never printed;
• the reason, in the memo field of the voided or reversing transaction, such as "Lost in mail; stop payment placed; reissued as 1062";
• for a delivered check, the confirmation of the stop-payment order and its expiry date;
• the reference to any replacement check.

What does it look like before and after?

Case 1: check written and voided in the period being reconciled. Check 1045 for 750.00 to a supplier is written on March 20 and voided on March 28, before it is mailed. The March bank statement shows 11,350.00.

The void's effect on the ledger:

Case 2: check from a reconciled earlier period. Check 1012 for 1,200.00 was mailed on January 15 and has never cleared. January's completed reconciliation lists it as outstanding. The payee says it never arrived. In March you place a stop payment and record a reversing entry dated March 31; in April you reissue the payment as check 1062.

The reversing entry, dated March 31:

January's reconciliation is unchanged. Check 1012 and its reversal clear together in March. The restored 1,200.00 owed to the payee is then settled in April by check 1062, which sits on April's outstanding list until it clears. Had the void been dated January 15 instead, January's book balance would rise by 1,200.00 and the signed-off January reconciliation would no longer agree.