Reverse a Paycheck

This article is part of a series that describes the considerations and processes when correcting a payroll check.

• Paycheck Correction Overview
• Reissue a Paycheck
• Void a Paycheck

On This Page
→ Related Notes → Tutorial Video	→ Process a Paycheck Reversal · Example

Reverse a check if there was an error and the employee has already cashed the check or deposited it via ACH. A reversal will create an Advance Bank transaction that deducts or adds funds to the employee's future paycheck to remove the outstanding balance.

For more information on reversing a paycheck with transaction-level adjustments such as reimbursements, per diems, or equipment deductions, see Reverse a Paycheck with Transaction-Level Adjustments.

This article covers paycheck corrections only. For invoice corrections, see the Invoice Corrections article.

Reversing a paycheck affects the Tax Report. Taxes are tied to the date on the check — if a check was issued in Q2 and reversed in Q3, the correction will appear in Q3, not Q2.

Related Notes

• The Advance Bank in the employee's record does not affect any reports until the new check or next check is processed for the employee.
• If a check has an incorrect deduction but has not yet been distributed or cashed, it can be voided instead of reversed.
• Any agency or non-employee check that has not yet been distributed or cashed should be voided instead of reversed. In versions 16.1 and newer, an error message will display preventing non-employee checks from being reversed.

Tutorial Video

Process a Paycheck Reversal

1. From the Main Menu, navigate to Back Office > Paycheck.
2. Perform a search using the search field at the top of the window to display results in the Paycheck search grid.
3. Select the paycheck to reverse by double-clicking its row.
4. Click the Actions menu.
5. Click Reverse Paychecks. The Reversal Paycheck window displays.

6. Fill in the fields with the appropriate information:

   Note: The Errors & Warning tab is only available in versions 16.1 and newer.
   Note: Check Generate Original Pay Units when you need to bring the transaction back into Time Entry to adjust hours, rates, taxes, or deductions.
   

   Field	Description
   Accounting Period	Select the appropriate accounting period. Note: Avionté best practice is to process any paycheck corrections in the current accounting period.
   Check Date	If the original check and the corrected check are issued in the same filing year, set the date to today's date or a date in the future. Note: All corrections should be made in the current accounting period when possible. Do not backdate the check date unless the special circumstance below applies. Manipulating this date will affect quarterly and year-end tax filings. If the original check was issued in the previous year (e.g., December 2017) and the correction is processed in the current year (e.g., any time in 2018), set the check date to the last day of the previous year (e.g., December 31, 2017). Processing the correction this way avoids negative wages in the current year. Failing to do so can cause severe errors in your year-end process. Note: If the check correction was processed across filing years as described above, it is necessary to amend the prior year filings. Consult your financial adviser for more information. In versions 16.1 and newer, the config option CheckCorrectionWindow controls the window in which the date can be set. A red exclamation point indicates if the chosen date falls outside the window. See the CheckCorrectionWindow article for more information.
   Run Type	"Check Reverse"
   Bank	Select the bank account to use for processing this reversed check.
   Description	Enter information regarding the reversal. This field is optional.
   Generate Original Pay Units	Check this box to insert a transaction back into Time Entry. Takes the original transaction and recreates it in Time Entry.
   Apply State Minimum Wage	Check this box to apply the state minimum wage to the pay units. In some states, the employee can be paid the state minimum wage if they walked off the job.
   Reason	Enter or select a reason why the check is being reversed.

7. Click Finish. The check is processed and a message reading "Paycheck reversal has been processed" displays.

8. Click OK.

   Note: Certain DRMs will run prior to the batch process. Any errors will appear in the Error & Warning tab.
   

   • Mark the Approve checkbox to approve any warnings.

     Note: Severe errors must be fixed by canceling the batch before processing and posting can continue.
   • Click Finish to complete batch processing.
9. A message reading "Payroll has been posted" will display. Click OK.

10. If Generate Original Pay Units was checked in step 6, return to Time Entry to make any adjustments, then proceed through the payroll process as normal.

    Note: Confirm that the check date selected when issuing the new check is in the same year and quarter as the initial check being corrected. Issuing in a different year or quarter can cause severe errors during your year-end process.

Example

Employee Ann Smith's check (#12345) was paid a gross amount of $550.00. Taxes of $125.00 were deducted, leaving a net of $425.00. A reimbursement of $450.00 (a negative deduction created in Time Entry) brought the check total to $875.00.

Ann Smith #12345

Gross: $550.00
Taxes: $125.00
Deduction: -$450.00
Total: $875.00

She cashed this check before it could be voided, necessitating a reversal. Reversing check #12345 creates rv12345, which voids out check #12345 and produces a net pay of $0.00 between the two checks, keeping Avionté's records complete.

Ann Smith rv12345

Gross: -$550.00
Taxes: -$125.00
Deduction: $450.00
New Advance Bank Total: $875.00

The system will produce an Advance Bank deduction of $875.00 on the employee's record to recoup the original funds from the next check. However, when reprocessing the new check, the Advance Bank deduction will need to be increased to account for the $450.00 reimbursement paid on the reversed check.

Before Edit	Action	After Edit
Ann Smith #12346 Gross: $550.00 Taxes: $125.00 Deduction: -$450.00 Advance Bank Total: $425.00 Check Amount: $450.00	Make edit in Payroll > Checks	Ann Smith #12346 Gross: $550.00 Taxes: $125.00 Deduction: -$450.00 New Advance Bank Total: $875.00 Check Amount: $0.00

Increasing the Advance Bank deduction to match the amount in the Employee record will subtract this amount from the next check and recoup the outstanding balance.

Note: The Advance Bank amount should not be increased to the point where the final delivered check is negative.