Concept Definition
What is a debit note?
A debit note is a commercial document issued by a buyer to a supplier requesting an increase to an existing invoice, or issued by a supplier to correct an undercharge. It increases the receivable or payable amount. Debit notes are less common than credit notes and have varying definitions across jurisdictions.
What is the difference between a debit note and a credit note?
A credit note decreases the amount owed. A debit note increases the amount owed. In practice, most corrections are handled via credit notes followed by a new invoice rather than debit notes, because debit note treatment varies across jurisdictions and ERP systems.
Frequently Asked Questions
- Is a debit note a valid VAT document?
- In some jurisdictions, a debit note is a recognized VAT document equivalent to a supplementary invoice. In others, only the original invoice and credit notes are recognized for VAT purposes. Businesses should verify local VAT rules before using debit notes as VAT documents.
- When should a debit note be used instead of a new invoice?
- A debit note is typically used when an additional charge relates to an existing contract or purchase order and must be linked to a prior invoice. For entirely new charges unrelated to prior invoices, a new invoice is more appropriate.