Definition: A void check is a check that is no longer useful for payment purposes because it has the word “VOID” written in the front. This word nullifies the instrument making it no longer negotiable.
What Does Void Check Mean?
Individuals and corporations should maintain an adequate trace of their checkbooks in order to avoid frauds or overdraft situations. Sometimes, mistakes are made when checks are being filled and in these cases, the word “VOID” should be written in the check to identify it as no longer valid for cashing. Nevertheless, the check will still display all the account’s information, which is a dangerous situation since electronic payments can be issued and approved with this information at hand. To avoid this scenario, voided checks should be destroyed immediately if possible.
On the other hand, checks are also voided to provide banking information to employers when a person is enrolling at a new company. Finally, from an accounting perspective, if a check was issued and voided afterwards it should be notified to the Finance Department of the company for them to erase the payment from the outstanding check’s record. This will allow the company to update its cash flow estimations accordingly.
Example
Sicilian Palace LLC is an Italian restaurant located in the hearth of Miami. The restaurant is well known for its pizzas and calzones and the owner, Luigi, is also well known for keeping a tight ship when it comes to the restaurant’s finances. Recently, he had an issue with a cheese supplier who said that a check issued by Luigi bounced at the bank. Luigi was very sorry for the situation and after reviewing the matter he recognized that he made a mistake in his signature.
He decided to void the check and issued a new one for his supplier, then he invited him and his family for a free dinner to compensate for all troubles caused. The voided check was adequately destroyed and the new one was assigned as the payment for that supplier’s invoice in the company’s accounting system.
