A debit note, also known as a debit memorandum or memo, is a commercial document used in business-to-business transactions. It is issued by a buyer to a seller as a means of formally requesting a credit note or to inform the seller of current debt obligations. A debit note acts as the source document to the Purchase returns journal and is evidence for the occurrence of a reduction in expenses. It can also be issued by the seller instead of an invoice to adjust upwards the amount of an invoice already issued.
Debit notes are generally used in business-to-business transactions that involve an extension of credit, meaning that a vendor would send a shipment of goods to a company before the goods have been paid for. They are separate from an invoice and inform the buyer of current debt obligations. A debit note can also be created by a buyer when returning goods received on credit. It provides information regarding an upcoming invoice or serves as a reminder for funds currently due. For returned items, the note will include the total anticipated credit, an inventory of the returned items, and the reason for their return.
A debit note is most commonly created when part of a delivery or shipment of goods is being returned to the seller because the returned goods are damaged or defective. The debit note accompanies the returned goods, explaining in adequate detail to the seller why the goods are being returned and indicates the amount by which the seller needs to adjust its invoice to the buyer, reducing the amount due for the sale by the amount of the returned goods.
In summary, a debit note is a commercial document used in business-to-business transactions to inform the seller of current debt obligations or to request a credit note. It is also used when returning goods received on credit.
