Voided check definition
/What is a Voided Check?
A voided check is a check that has been cancelled. Once it has been appropriately voided, a check cannot be used. There are several possible reasons for a voided check. For example, there was a mistake in filling out the check, or the check was blank or only partially filled in, or the check was issued in error, or the check was submitted by an employee to an employer for use in setting up a direct deposit payroll account. In all of these cases, the voided check is not cashed.
How to Void a Check
A voided check may be perforated with a "Void" stamp, or crossed out, or have "Void" written across it, be shredded, or simply be stored in a voided checks file. It is best to permanently deface or destroy a voided check, so that no one can present it to a bank at a later date and expect to be paid for it. If the check is not currently in the company's possession, then contact the bank and authorize a stop payment on the check (for which the bank will charge a fee). If you write “Void” on a check, always use ink; someone could erase a “Void” mark made with a pencil and then try to cash the check.
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How to Void a Check You Already Sent
If you already sent a check to someone, then it is not possible to void it. The recipient will be able to cash the check unless you immediately contact your bank and have them issue a stop payment on that check. Doing so will block the bank from honoring the check when the payee presents it. The bank will charge a fee whenever you request a stop payment. In order to send the correct information to the bank to stop payment, you will need to extract the requisite information from either a copy of the check or the check register.
This situation may arise when you write a check for the wrong amount, send it to the wrong party, or realize after the fact that you do not have sufficient cash in your checking account to fund the check when it is presented for payment.
Accounting for a Voided Check
In the accounting system, the check would have been recorded when it was originally created, so a reversing entry must be made that debits (increases) cash and credits (decreases) the account to which the payment applies. Thus, if the payment had been for an expense, the credit would be to the related expense account; if the payment had been to acquire an asset, the credit would be to the related asset account.
If there is a check register, the reversing entry is needed in order to record the elimination of the accounting transaction associated with the check number that is printed on the check.
In a computerized accounting system, there is usually a menu option for voiding a check, since this is a sufficiently common activity to warrant having its own routine.
When to Use a Voided Check
There are several situations in which a voided check might be used. The most obvious one is when a mistake has been made when writing a check, such as stating the wrong payee or amount to be paid. Writing “Void” across it prevents someone from using the check to falsely extract money from the person’s checking account. Another use for a voided check is to set up direct deposit payments, usually for payroll payments from your employer into your checking account. The employer needs a voided check in order to extract the bank account information from the bottom line of the check. Yet another use for a voided check is when a lender wants to use it to set up an automated loan payment. As was the case with direct deposit, the lender will want to use the bank account information listed on the bottom line of the check.
What is a Voided Check for Direct Deposit?
Many employers ask their employees to submit a voided check in order to set up payroll direct deposit. To do so, an employee simply writes “Void” in large font across a check and gives it to the human resources department. If you want to be extra careful, you might write “Void” across the payee line, as well as on the signature line and in the payment box. No matter which approach you use, do not write on the magnetic ink characters across the bottom of the check, since doing so might obscure the bank number and account number that the human resources department needs. The reason why employers ask for a voided check is that your checking account information is stated across the bottom of the check; this information is then used to set up direct deposit payments to you.
Before giving an employer a voided check, it can make sense to first make a copy of the check, so that you know how the check was used.