If the client payment has not been posted, you can just delete the entry on the Enter Client Payments window (Billing > Payments Received).
NOTE: To be able to delete transactions, Allow Ledger Deletions must be checked and Accounting Method must be set to Cash in Company Preferences.
However, if the client payment was posted, follow these steps to reverse the entry.
Enter a client
payment for the same payment amount, matter number, and deposit
account as the original payment, but add a minus (-) in front of the
payment amount. This will make it a negative client payment.
NOTE: Do NOT enter a client payment for the same POSITIVE amount as
your negative client payment and post it in the same batch as this
one! Neither payment will post to your General Ledger.
Select No Invoice.
Enter a description that notates the purpose of the reversal.
Complete the Breakout and Fee Distribution tabs, matching them to the breakout and fee distribution on the original payment you are reversing. (If you need to verify the fee distribution, you can run the Timekeeper Cash Receipts report under Reports > Productivity for the date and matter number of the payment.)
Before posting the payment, change the deposit date to the date of the original, incorrect payment.
TIP: If you would like to prevent a reversal from appearing on the client's next invoice, edit the reversal transaction and change the Billing Status to Billed.