Debit Note

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DEFINITION of 'Debit Note'

A document used by a purchaser to inform a vendor of the quantity and dollar amount of goods being returned, and requesting that the dollar amount be returned to the purchaser. A debit note is often used to return goods on credit. The vendor then issues a credit note to the purchaser indicating that the goods have been received, and that the purchaser will not have to pay for them.

Also known as a "debit memo".

BREAKING DOWN 'Debit Note'

Debit notes are generally used in business-to-business transactions. Such transactions often 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. Although real goods are changing hands, until an actual invoice is issued, real money is not. Rather, debits and credits are being logged in an accounting system to keep track of inventories shipped and payments owed.

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

    Debit notes are a form of proof that one business has created a legitimate debit entry in the course of dealing with another ... Read Full Answer >>
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    A debit note is used to reduce the amount of a vendor's accounts payable account or to increase the amount of a customer ... Read Full Answer >>
  3. Who uses debit notes in business transactions?

    A debit note, sometimes called a "debit memo," is normally used in business-to-business transactions to inform one party ... Read Full Answer >>
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