A debit note records an increase to an amount owed - correcting an invoice that undercharged, billing for additional items, or a buyer formally notifying a supplier of a return before a credit note is issued back.
What it means
Where a credit note reduces a balance, a debit note increases it, or documents that the issuing party expects a reduction from the other side. Either party in a transaction can issue one, depending on the correction needed.
Where it fits in
Debit notes are the less common counterpart to credit notes in day-to-day trade accounting, used whenever a correction runs the opposite direction to a normal credit adjustment.
Key rules
- Increases a previously billed amount, or documents an expected credit.
- The mirror document to a credit note.
- Must reference the invoice or transaction it corrects.
- Can be issued by either the seller or the buyer.
