Invoice types
Debit note
A debit note is a document used to indicate an adjustment that increases the amount owed on a transaction, for example, an undercharge by a seller or goods a buyer returns to a supplier.
What a debit note does
A debit note signals that one party owes more than a previous document showed. A seller might issue one to correct an invoice that undercharged the buyer; a buyer might issue one to a supplier when returning goods, indicating the supplier now owes a credit.
It references the original invoice so both sides can adjust their records cleanly without editing the original document.
Debit note vs. credit note
A debit note and a credit note are mirror images. A debit note increases the amount owed (or flags an expected reduction in what you owe a supplier); a credit note decreases the amount a buyer owes. Often, one party’s debit note is answered by the other party’s credit note for the same amount.
Both keep your audit trail intact by adjusting through a new document rather than altering the original invoice.
Example: A supplier’s invoice undercharged a client by $200. The supplier issues a debit note for $200 referencing the original invoice, raising the total the client owes.
FAQs
Frequently asked questions
What’s the difference between a debit note and a credit note?
A debit note increases the amount owed on a transaction; a credit note decreases it. They’re mirror images and often reference the same original invoice.
Who issues a debit note?
Either party can. A seller issues one to correct an undercharge; a buyer issues one to a supplier when returning goods to indicate a credit is due.
Related terms
Credit note
A credit note (or credit memo) is a document a seller issues to a buyer that reduces or cancels the amount owed on a previously issued invoice.
Invoice
An invoice is a document a seller sends to a buyer that itemizes goods or services provided and requests payment by a stated due date.
Purchase order
A purchase order (PO) is a document a buyer sends to a seller to officially authorize and commit to a purchase, listing the items, quantities, and agreed prices.
Put it into practice
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