Correcting a Sent Invoice: Void, Reissue or Edit

Every company sends a wrong invoice eventually. The PO number is missing, a flagger was billed for a full shift instead of half, the customer was the prime instead of the sub, or the tax rate was the wrong county's. The mistake itself is ordinary. What matters is how you fix it, because a sent invoice is a record twice over: in your books, and in your customer's accounts payable queue.

The fix you choose decides whether your books, your customer's books and your audit trail still agree afterward. This post covers the three common fixes (edit, void and reissue, and credit), when each is right, and how to tell the customer. It is general bookkeeping guidance. Your accountant decides how corrections post in your books, and your state's rules decide how a sales tax correction is handled.

First question: has money moved?

Before choosing a fix, answer three questions:

1. Has the customer paid any of it? Once money has moved, the original invoice is part of a completed transaction. Changing it rewrites history the payment depends on.
2. Has the customer entered it? If the invoice is already in their accounts payable system, they have a record that will not match a quietly edited copy.
3. Does the change touch the amount, the customer or the tax? Those are the parts other records depend on. A typo in a description does not.

The answers point to the fix.

Edit: unpaid, not yet entered, small change

Editing is right when the invoice is unpaid, the customer has not entered it, and the change is small: a missing PO number, a corrected job site address, a clearer line description, a fixed contact name.

Do it this way:

• Make the change on the same invoice, keeping the same number.
• Resend the corrected copy, and say in one line what changed.
• Make sure your system records who changed what and when.

Editing a sent invoice is not hiding anything, as long as the change is recorded and the customer gets the corrected copy. It becomes a problem when the amount changes on an invoice the customer already holds, because now two copies with one number say two different things.

Void and reissue: wrong amount, wrong customer, wrong tax

Void and reissue when the change is material and the customer has, or may have, the original in their system: the wrong customer was billed, the amount is wrong, the tax is wrong, or the invoice should not exist at all (a duplicate, or work that was cancelled).

Voiding marks the invoice as cancelled while keeping it in your records. Its number stays used, so the sequence has no gap, and anyone looking at your books can see what happened. Then issue a new invoice with a new number, and reference the voided number on it so both sides can connect the two.

Record why you voided it. A reason such as "duplicate of 1041" or "billed to prime in error, reissued to sub as 1063" takes ten seconds and answers the question your accountant, your customer or an auditor will ask months later.

Never delete a sent invoice. Deleting removes the document from your records, leaves a gap in the numbering, and leaves the customer holding an invoice your books say never existed.

Credit: paid, or correct when issued

A credit is the right fix when the original invoice was correct at the time and something changed afterward, or when it has already been paid. Examples: the customer paid for ten days and the rental came back after eight; a damage charge was waived after the fact; a disputed line was settled for less.

A credit memo is a separate document, dated when the change happened, that reduces what the customer owes or records money you owe them. It leaves the original invoice exactly as it was issued and paid, which is the point: the history stays true. Traffic OS does not issue credit memos. If your books are kept in an accounting system that does, issue the credit there, and record any refund through the processor that took the payment.

Revert to draft: sent by mistake

Sometimes an invoice is marked as sent when it never went out, or goes out before the office meant it to. If nothing has been paid against it and the customer has not acted on it, moving it back to draft is the cleanest fix. It undoes the send, not the invoice.

Payment mistakes are a separate fix

A payment recorded wrong is not an invoice error. If a check was recorded as cash, the date is wrong, or the amount was mistyped, correct the payment record itself, not the invoice. Limit who can do it. Correcting a payment changes the invoice's balance and every report that counts cash, so it belongs with a small number of people the owner trusts. Our post on user roles and permissions covers how to split those rights.

Keep the trail

The goal of every fix is the same: someone reading your books later can see what was billed, what changed, when and why.

The IRS guidance on what kind of records to keep lists invoices among the supporting documents that back the entries in your books and on your tax return. A voided invoice is part of that support: it explains why one number in the sequence produced no revenue. The IRS page on how long to keep records ties retention to the period of limitations for the return the records support. Its general rule is 3 years, with longer periods in some situations, including 6 years if you leave out income worth more than 25% of the gross income shown on the return, and 7 years if you claim a deduction for a bad debt. Keep voided invoices as long as the rest.

Tell the customer

Whatever the fix, send one short, specific note:

• the old invoice number and its status (corrected, void, or credited),
• the new invoice or credit number, if there is one,
• what changed, in one sentence, and
• a request to discard the old copy if it was voided.

Send it to the person who handles payables, not only the field contact. The most expensive outcome of a correction is a customer who pays both the old and the new invoice and then takes months to sort it out. Our post on getting paid faster covers the rest of the payables relationship.

A note on sales tax

A correction that changes the tax changes what you owe the state. If the original was in a period you have already filed, ask your accountant how your state wants it handled before you reissue. Do not assume the new invoice simply replaces the old one in the return.

How corrections work in Traffic OS

Traffic OS gives each fix its own action, and its audit log records every change, send and signature.

• Edit. An unpaid invoice can be edited, and the change is recorded in the audit log. A paid invoice is locked, except for its issue date.
• Void. Voiding keeps the invoice in your records and marks it void. You can enter a reason, which is kept in the audit log. Voided invoices are left out of the revenue totals in the reports.
• Un-void. An invoice voided by mistake can be restored. Its status is worked out again from the payments recorded against it.
• Mark as sent. For an invoice delivered outside the system, such as by hand or from another mailbox.
• Revert to draft. A sent invoice with no payments recorded can go back to draft.
• Payment correction. Users with the permission can correct a recorded payment's method, date, reference or amount, and the invoice's balance is updated to match.
• Resend. The corrected invoice can be emailed again, and Traffic OS tracks whether it was delivered and opened.

Traffic OS does not issue credit memos. If your invoices sync to QuickBooks Online, our post on QuickBooks integration covers how the two systems share the work. See the payments and invoicing features for the rest.