I'm here to help and ensure that the failed direct deposit will not show on your vendor's total so you can process 1099.
If the payment is not yet processed, you can void or delete the transaction. To void it, here's how:
Go to Expenses and select Expenses.
Find the transaction, then open it.
Select More to void or delete.
Select Yes to confirm the action.
However, if this payment was processed already, you can create a journal entry to offset the amount. Using this feature requires the assistance of an accountant. Your accountant can help and guide you on which account to debit and credit. See the steps below: