Debit Memorandum

What is a 'Debit Memorandum'

1. A document given to an account holder which states that the account balance has been decreased as a result of factors other than a cash withdrawal or a written check being cashed in. Debit memorandums can arise as a result of bank service charges or bounced check fees. A debit memorandum is typically sent out to bank customers along with their monthly bank statements.
Also known as a "debit memo", for short.


2. The adjustment procedure that occurs following a business's valid complaint against another business. For example, if Company A sends defective merchandise to Company B, a debit memorandum would be issued in order to adjust the accounting statements in terms of debits and credits.

BREAKING DOWN 'Debit Memorandum'

It is usually preferable to avoid debit memorandums from either the individual or business perspective. Individuals typically incur undesirable fees for additional bank service charges or for having a check bounce. On the other hand, there are numerous implicit costs for a business debit memorandum such as possible loss of reputation and human labor to make the necessary adjustments.

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RELATED FAQS
  1. What are some examples of debit notes in business-to-business transactions?

    Review some examples of debit notes in business-to-business transactions and learn why debit notes would be used instead ... Read Answer >>
  2. How do you calculate credits and debits in the general ledger?

    Know the key points when balancing a ledger and why it's essential to understand the relationship between credits and debits ... Read Answer >>
  3. What happens when my bank account is debited?

    Understand the process that takes place when your account is debited. A debit to your account happens when you use funds ... Read Answer >>
  4. Who uses debit notes in business transactions?

    Read about the types of parties that are most likely to issue or receive a debit note in the normal course of business-to-business ... Read Answer >>
  5. How are debit notes to help collect on a debt?

    Learn what a debit note is and how it's associated with a debit memo request. Understand how a debit note works to help a ... Read Answer >>
  6. What is the difference between a summary prospectus and an offering memorandum?

    Understand what investments require a summary prospectus or a offering memorandum, and learn the differences between the ... Read Answer >>
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