In ContactsLaw, payments made from a trust or general account can be marked as cancelled.
This commonly occurs when:
- a cheque is filled out erroneously and a new cheque number is required
- the practice contacts the bank and stops a payment before the cheque can be cashed
- an unpresented cheque becomes stale
Cheques can be cancelled at any time until the transaction has been reconciled.
ContactsLaw takes cancelled cheques into account when allocating subsequent cheque numbers. A warning will be issued if the user attempts to reuse a cancelled cheque number.
Cancellation process
Typically a cheque is cancelled by right-clicking the transaction and choosing the 'Cancel cheque' option.
If the system setting 'Notify bank immediately after cancelling cheques' is enabled, ContactsLaw will prompt you to create a document using the controlled template 'Cancelled cheque' to notify the bank of the cancellation.
If the above option is not configured, or the user skips the document creation activity, the transaction will open in a new window to confirm that the payment was cancelled. You should add the date on which the bank was/will-be notified of the cancellation.
Effect on ledgers
When a cheque is cancelled, the system posts a trust or general cancellation transaction. The cancellation takes effect on either the date of cancellation or, if the bank was notified of the cancellation (which should happen in most cases), the date that the bank was notified.
Since there may be a period between the posting of the original transaction and its cancellation, the cheque will continue to affect the ledger balance until the cancellation comes into effect.
Effect on reconciliations
Cancelled cheques (and their corresponding cancellation transactions) do not appear in the list of transactions that can be included in a reconciliation, and thus cannot be reconciled. However, when printing a reconciliation, the report lists any cheques which were cancelled during the statement period.
See also
Trust payment
General payment
Cancel disbursement cheque