Reverse a payment
Reverse payment is the tool that takes a payment recorded on a purchase order back when it was wrong: paid to the wrong vendor, paid twice, paid the wrong amount, or returned. The items go back to owed, the ledger entry is cancelled by a mirror image dated today, and the original payment stays on record.
When should I reverse a payment instead of correcting the order?
Reverse a payment when the payment itself was wrong: it went to the wrong company, the same invoice was paid twice, the wrong amount was paid, or the money came back. Use a correction instead when the order's amounts were wrong but the payment can stand. Once a purchase order has a payment on record, it is part of your accounting record and is locked, and both tools add to the record instead of changing it.
| What went wrong | What to use |
|---|---|
| The order's amounts were wrong but the payment can stand: a credit memo, a refund, a tax error, too much or too little billed. | Adjust this PO, which adds a correction next to the order. |
| The payment itself was wrong: it went to the wrong company, the same invoice was paid twice, the wrong amount was paid, or the money came back. | Reverse payment, which takes the payment back and puts the order back to owed. |
A payment is reversed whole. Every paid item on the order is reversed together; you can't reverse one item or part of an amount. For a partial refund, use a correction.
Who can reverse a payment?
Owners, admins and anyone you have given the Post to the ledger permission can reverse a payment. Everyone who can see financials can see the reversals on the order, but the button is not shown to them.
It works on an order that has a payment on record: a Paid order, a Closed order that was paid, or an order that has been paid in part. It doesn't work on a draft or a cancelled order, or on an order with no payment on record.
How do I reverse a payment?
Open the purchase order, choose Reverse payment, say why, check what will be posted, and confirm. The five steps are:
Open the purchase order
In Procurement, open the Purchase Orders tab and choose Open on the order. An order with a payment on record shows a Payment reversals card and, for people who may use it, a Reverse payment button.
Check that it can be reversed
The window first checks what a reversal would do right now. If it can't be done, it says why in one sentence instead of showing the form: for example, a correction on the order is still in effect, or another reversal is already waiting.
Say why
Pick a reason (wrong vendor, duplicate payment, wrong amount paid, payment returned or other) and write what happened, in at least 10 characters. That note is saved with the reversal and on its ledger entry. If the order is Paid, choose what it goes back to: Invoiced (the usual choice), Delivered or Issued.
Read the confirm step
It says in words what will be posted, for example Debit Cash $10,800.00. Credit Accounts Payable $10,800.00, dated today. It says that the items go back to owed, what the order goes back to, and that job cost does not change. If a second person has to approve the reversal, it says so here, before you click.
Reverse the payment
Choose Reverse payment (or Save for approval). The date is always today; it can't be changed. Pressing the button twice reverses the payment once.
What does a reversal change?
A reversal puts the order back to owed, cancels the payment in your ledger with a mirror-image entry dated today, and leaves job cost alone. The table shows each place it appears.
| Where | What you will see |
|---|---|
| The purchase order | It goes back to Invoiced, or the status you chose. A Closed order stays Closed. Its lines, tax, total and vendor are never touched. The original payment stays on record: the Payment reversals card lists the reversal next to it, with the date, the amount, the reason, who asked and what happened. |
| The items | They go back to owed. The paid date is cleared, and so is the payment approval, so the next payment needs a fresh one. |
| The ledger | One new entry for each paid item that was posted, dated today: debit Cash, credit Accounts Payable, for what was paid. The payment's own entry stays on record, marked reversed. In the month the payment was made it still stands; from the day of the reversal the two cancel out. |
| Job cost, the budget line and work in progress | They do not change. Reversing cash is not reversing cost. |
| AP aging | The order counts again at its full total, because it is owed again. |
| The purchase order list | A small tag says payment reversed while the order is owed again because of it, reversal waiting while it waits for a second person, and reversal not finished if it was recorded but not finished. The CSV export has a Payment reversal column. |
| The vendor's copy | The PDF you send shows the order's status, so a Paid order that was reversed reads Invoiced. Nothing else on it changes, and it never shows your reason. |
| The General Ledger | The reversal's entry has no Reverse entry button. It points to the purchase order, where the reversal is listed. |
Which date does a reversal get, and what if the month is closed?
A reversal is dated today, in your company's calendar (the time zone in Settings). It is never put into a month that has been closed. If that month is closed, ask someone with the Close / reopen periods permission to reopen it, then try again.
The month the payment was made in is not touched, so it can be closed. And if the payment never reached your ledger there is no entry to undo, so a closed month doesn't matter.
When does a second person have to approve it?
A second person has to approve a reversal when the payment is at or above the limit your company has set under Payment approval in Settings. The limit is measured on the whole payment being reversed. The confirm step says so before you click, and the reversal is saved as waiting for approval: nothing is posted, the items stay paid and the order keeps its status. Everyone who can approve it is told in the app. No email is sent.
The person who asked can never approve it. Someone else who holds the Approve payments permission opens the order and chooses Approve or Reject on the Payment reversals card, and the person who asked can choose Withdraw. Approving carries the reversal out as described above. Its entry is dated the day it was asked for, or the day it is approved if that month has been closed since. A rejected or withdrawn reversal stays on the card and changes nothing. The steps are the same as for a correction: see Correct a paid purchase order.
What if a reversal could not be finished?
It stays recorded, and it is finished automatically each night, or when you choose Finish now, in the window or on the card. A reversal is recorded first and carried out in steps: the items go back to owed, the ledger entry is cancelled, the order is set and the reversal is marked done. If a step can't finish just now, for example because the month turned out to be closed, the window tells you why, and the card shows the reversal as Not finished.
Finishing carries out only what is left. A payment that was made again in the meantime is never touched.
What happens to the order after a reversal?
It is an ordinary unpaid order again. Once the payment is reversed you can edit it, for example to fix the vendor or the lines, and pay it again. That is a new payment dated its own day, and the first payment and its reversal both stay on record. If the order was a duplicate, you can cancel it.
What are the limits?
A reversal covers every paid item on the order, only one can be open at a time, and it needs a payment on record. The details:
- Every paid item on the order is reversed together. You can't reverse one item or part of an amount; for a partial refund, use a correction.
- An order with a correction that is in effect or waiting for approval can't have its payment reversed. Void the correction first.
- One reversal at a time: while one is waiting for a second person or is not finished, another can't be started.
- A reversal can't be edited or deleted. One that a second person rejected, or that was withdrawn, stays on the card, and the payment can be asked about again.
- The demo project is read-only, so nothing can be reversed on it.
How does a reversal affect the 1099?
The 1099 list counts payments by the year they were made, so a payment that was reversed in the same year it was made cancels out, and that year shows nothing for it.
A payment made in one year and reversed in a later year stays in the year it was made. That year's list is not reduced by a later return, and the later year does not subtract it. The 1099 tab prints a note for each one, for example $10,800.00 paid 2026-12-20, returned 2027-01-06, and the CSV download carries the same text. A payment made again to the right vendor counts in its own year, like any payment. A payment sent to the wrong vendor stays with that vendor's earlier year unless it was reversed in the same year.