Voided Direct Deposit Paycheck Refund Scenarios
This article explains what happens to direct deposit funds when you void a paycheck in Patriot Payroll. The outcome depends on when you void the paycheck relative to the collection and pay dates. For instructions on how to void a paycheck, see How to Void or Cancel a Paycheck.
How Direct Deposit Works
Patriot processes direct deposits in compliance with NACHA (National Automated Clearing House Association) rules, which govern the timing and processing of ACH transactions. Because of these rules, there is a required delay between when Patriot collects funds from your bank and when Patriot can confirm the collection was successful.
The direct deposit process has two stages:
- Collect funds: Patriot debits your bank account to collect payroll funds. Even if the debit appears in your bank account right away, NACHA rules require 1–2 business days for Patriot to confirm the collection was successful.
- Send funds: Once the collection is confirmed, Patriot schedules the direct deposit payments to employees for the designated pay date.
Timing and Fund Status Scenarios When Voiding Payroll
When you void a paycheck that was set up for direct deposit, what happens to the funds depends on three factors: when you void, whether the funds have been collected, and whether the funds have already been deposited into the employee’s account.
The void process in Patriot shows a Direct Deposit status in Step 2. This status — Not Collected, Collected, or Deposited — tells you where the funds are and what options you have.
Scenario 1: Before the Payroll Collection Deadline
When this applies: You void the paycheck before 8:00 PM ET the night before the collection date.
Direct Deposit status in Step 2: Not Collected
What happens: Patriot has not yet initiated the ACH collection from your bank account. No funds will be collected, and the employee will not be paid as a result of this payroll.
Scenario 2: After the Collection Deadline but Before the Pay Date
When this applies: You void the paycheck after the collection deadline but before 7:00 PM ET the day before the pay date.
Direct Deposit status in Step 2: Collected
What happens: This depends on whether the collection has been confirmed:
If the collection is unconfirmed (funds still in transit):
Patriot has initiated the debit but has not yet confirmed that the funds were received. This is common for expedited direct deposits.
- Once the collection is confirmed, Patriot will automatically refund the funds to your bank account (or to your Prefund balance if you use Prefund Direct Deposit).
- Due to NACHA processing timelines, the refund may take a couple of business days to appear in your bank account.
If the collection is confirmed (funds successfully received by Patriot):
Patriot has received the funds but has not yet sent them to the employee’s bank account. You have two options:
- Keep funds for a future payroll: Patriot will retain the funds in your Prefund Direct Deposit balance — a prepaid balance in your Patriot account that can be used to fund future payrolls. See How to Use Voided Payroll Money to Prefund a Future Payroll below.
- Refund to your bank account: Patriot will return the funds to your bank account the next banking day.
Scenario 3: On or After the Pay Date
When this applies: You void the paycheck on or after 7:00 PM ET the day before the pay date.
Direct Deposit status in Step 2: Deposited
What happens: Patriot has already sent the funds to the employee’s bank account. The direct deposit cannot be stopped or reversed after funds have been deposited.
To recover the overpaid amount, you will need to:
- Contact the employee and arrange repayment directly.
- Deduct the overpaid amount from the employee’s future paychecks, in accordance with applicable wage payment laws.
How to Use Voided Payroll Money to Prefund a Future Payroll
Prefund Direct Deposit is a feature in Patriot Payroll that lets you hold a prepaid balance in your account to fund future payrolls. When you void a paycheck with a successful collection and choose to retain the funds, Patriot adds the collected amount to your Prefund Direct Deposit balance.
To use voided payroll funds to prefund a future payroll:
- In Step 2 of the void process, the Direct Deposit status will show Collected.
- Select “Keep funds available for use in future payrolls.” Patriot will enable Prefund Direct Deposit and add the voided funds to your Prefund balance.
- To view your current Prefund balance at any time, go to Settings > Account Settings > Payment Settings > Direct Deposit Settings.
- The next time you run payroll, your Prefund balance will be displayed. You can choose to apply the balance to fund that payroll.
Important notes about using Prefund Direct Deposit:
- When you fund a payroll using a Prefund balance, you can run payroll as late as 8:00 PM ET the day before the pay date.
- Your Prefund balance must be equal to or greater than the total direct deposit amount for that payroll run.
- If your Prefund balance exceeds the payroll total, the remaining balance will carry over and display in your Direct Deposit Settings for future use.
[Screenshot: The Direct Deposit Settings page in Patriot Payroll, showing the current Prefund balance, the option to add funds to the Prefund balance, and the status indicator showing whether Prefund Direct Deposit is enabled for the account.]
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