A payment received can be cancelled. For example, if an employer's check bounces after it is recorded on the system, the payment received can be cancelled to reflect the fact that the check amount was not actually received by the organization.
When a payment received is cancelled, the system creates a reversal instruction that represents the amount of the original payment received instruction.
If the payment received has been allocated toward any outstanding liabilities, these allocations must also be cancelled. For each allocation, an instruction line item is created with an amount equal to the original allocation amount. These instruction line items are liabilities that reflect the amount that had been previously cleared by the allocations, but that is again owed to the organization as a result of the payment received cancellation.
If an unallocated amount of the payment received has been refunded, these refund payments must also be cancelled. Depending upon the value of the application property curam.financial.createpaymentcorrectiononrefundcancel, the system will create either an overpayment case or a payment correction case for the amount that has already been refunded to the client. However if the refund payment issued to the client has already been cancelled, the replacement transaction that was created as a result of canceling the refund payment will instead be cancelled.
For example, a payment of $100 is received from the client and $80 is allocated towards an outstanding liability. Later, the agency refunds the remaining unallocated amount of $20 to the client through a check payment. If the payment for the $100 received from James Smith has bounced, the agency can cancel the entire payment received. When the agency cancels the payment received, any refunds associated with it must also be reversed and either an overpayment case or a payment correction case for $20 must be created to offset the refund amount that has been issued to James Smith. In the event that the refund payment of $20 has already been reversed before the cancellation of the payment received; the replacement transaction that was created as a result of canceling the refund will instead be cancelled.