A commercial adjustment document commonly used to increase an invoiced amount after an undercharge or agreed price increase, with usage varying by jurisdiction and system.
A debit note is a commercial adjustment document commonly used to increase an amount invoiced to a customer after an undercharge, omitted charge, quantity correction, or agreed price increase. It documents why the customer account is being debited and links the increase to the original supply.
Terminology varies. In some purchasing systems, a buyer may issue a debit note to notify a supplier of a return, shortage, or amount the buyer intends to deduct. That buyer-issued usage can have the opposite economic direction from a supplier-issued sales debit note. The document, issuer, contract, and local tax rules must therefore be checked before posting it.
| Issuer and context | Typical purpose | Effect claimed by issuer |
|---|---|---|
| Supplier-issued sales debit note | Correct an undercharge or agreed increase | Increases customer amount due |
| Buyer-issued purchase debit note | Notify supplier of return, shortage, damage, or deduction | Reduces buyer’s amount payable or requests supplier credit |
The same label can therefore describe different workflows. A recipient should not infer accounting direction from the title alone.
A supplier delivered 100 units that the contract priced at $50 each, but invoiced them at $48:
Original invoice before tax = 100 x $48 = $4,800
Correct amount before tax = 100 x $50 = $5,000
The undercharge is:
Debit note before tax = $5,000 - $4,800 = $200
The supplier can issue a $200 debit note, or another permitted correcting document, referencing the original invoice and price evidence. Any tax should be calculated under the rules applicable to the original supply and adjustment.
The buyer should verify that $50 was the agreed price. The debit note documents the claim; it does not settle a contract dispute by itself.
A useful supplier debit note generally contains:
HMRC’s U.K. VAT guidance specifies detailed content and timing for valid VAT debit notes. Those requirements are authoritative for their scope, not universal worldwide rules.
| Document | Common function |
|---|---|
| Debit note | Increases a prior seller charge, or records a buyer deduction claim, depending on context |
| Credit memo or credit note | Reduces a prior seller invoice |
| Supplemental invoice | Bills an additional amount through a new invoice |
| Corrected invoice | Replaces or amends an inaccurate invoice under the applicable process |
| Purchase return notice | Records goods returned by the buyer |
| Bank debit advice | Reports a debit to a bank account, unrelated to invoice adjustment |
Do not use a debit note when the process legally or contractually requires another form.
For a supplier-issued upward adjustment, the supplier may increase accounts receivable and revenue or another relevant account. The buyer may increase accounts payable and the related expense, inventory, or asset. A buyer-issued debit note may initially record a claim or dispute rather than an accepted adjustment.
The exact entries depend on whether the price change is agreed, whether goods were returned, tax treatment, inventory status, and the applicable accounting framework. Both parties should reconcile the note to the original invoice and remaining balance.
A debit note records an adjustment or claim; it does not prove contract acceptance, delivery, collectability, or legal enforceability. Tax and invoice rules vary by jurisdiction, and system terminology varies by organization.
This page is educational and is not accounting, tax, legal, audit, or personalized financial advice.