Billed fee or disbursement refund on paid invoice

QUESTION: Is there a time limit on when we can cancel a paid invoice?

We invoiced a client in a prior year for the full amount of $3135.00 but do to the process one of the disbursements was credited back to us today and the client is no longer moving forward with the matter, we have to return $1,135.00 back to the client.

Is cancelling the invoice via trust the only option?

RESPONSE: The recommended best practice would involve a current day reimbursement process to client that does not involve the cancellation of the invoice, compromise the timeline of firm and member measures and correctly affect your sales tax register.

To start the process, create a new 0.00 deposit slip with a new receipt properties form, check-marked so you can enter or select the fully paid invoice (bottom left). To the invoice record, enter a negative payment value in the amount needed to refund to the client. Create a second receipt properties form, with same value as a positive amount applied to a miscellaneous receivable GL account. The deposit slip should total 0.00 before it is posted. At this stage, the bank has not changed but now there is a receivable for the client in the amount of the refund.

To clear the new AR Balance, generate a credit note for the billed disbursement that is being reimbursed. Once posted, the AR balance for the client should be back to 0.00. Although you can refund the client by generating a general cheque against the miscellaneous receivable GL account where the positive receipt was applied, most firms generate the general cheque payable to the firm in trust to transfer the funds into the client’s trust account from which the reimbursement that will accompany the credit note is processed.

For a best outcome on measures, metrics, and audit trails, all these transactions should be currently dated.