Question:
Once a payment has been posted, you sometimes need to "cancel" it. This can be done by simply right+clicking the outgoing or incoming payment document and choosing "Cancel". That process creates a new entry to reverse the payment posting.
Can the original payment and the reversal entry be auto-reconciled?
Answer:
The answer is no, when you manually cancel a payment, it is not auto reconciled.The reason is that the cancellation is not always something that should auto reconcile.
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In these scenarios, you would want to have both transactions in the Bank Rec and reconcile each one individually.