A payment issued in error can be canceled. Canceling a payment indicates that a payment has not been received. For example, a payment may be canceled if a participant reports that a check has been lost in the mail. When a payment is canceled all of the instruction line items which comprise the payment are also canceled and their status changes from "Processed" to "Canceled".
When a payment is canceled, the payment is negated rather than deleted from the system. This is for accountability and traceability purposes. A reversal instruction line item is created for every instruction line item that was included in the payment.
In an integrated financial environment, canceling a payment involves a number of steps coordinated across both systems. The cancellation is initiated in the system as normal. However, before it is decided whether or not it is valid to cancel this payment, a request for the current status of the instruction line items involved is made to the ERP financial system. This ensures that the most up to date information is available for the system to evaluate.
Once the instruction line item information has been synchronized and the cancellation is approved by the system, a payment cancellation request is sent to the ERP financial system for each instruction line item included in the payment.
As each cancellation request is successfully processed by the ERP financial system, a document state message is generated to indicate that the instruction line item concerned now has a status of "Canceled".
When these document state messages are returned to the application, the "Canceled" status indicates to the system that the cancellation process can now be completed on the application side. This involves updating the status of the instruction line item and creating the appropriate reversal instruction line item.
A new payment status of "Partially Canceled" has been introduced. This status is specific to an integrated financial environment. It denotes a payment for which some, but not all, of the instruction line items comprising the payment have been successfully canceled on the ERP financial system. The first document state message returned from the ERP financial system with a canceled status causes the status of the payment to be updated to "Partially Canceled" by the application system. Only when all of the instruction line items comprising the payment have been confirmed as canceled is the payment status updated to "Canceled".