10/8/22, 6:12 PM Define Debit note and Credit note.

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Define Debit note and Credit note.

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Debit note and Credit note Definition, Function, Format

Definition:

A Credit note is a monetary document used to exchange for goods of equal value, issued by a seller to a buyer.The credit note

usually cannot be exchanged for cash.It can also be a document from a bank to a depositor to indicate the depositor's balance is
being increased because of an event other than a deposit, such as the collection by the bank of the depositor's note receivable.

Debit note is the documents that provide a debtor with information regarding an outstanding debt.When goods are returned to
the supplier, a Debit Note is made out of his name. A debit note is issued by the lender or creditor and serves as either

notification of a debt that will be invoiced shortly or a reminder of a debt that was previously invoiced and is currently
outstanding. While an invoice is also an official notification of a debt owed, it is not considered to be a debit note.

Function:

A Credit note or Credit memo is a transaction that reduces Amounts Receivable from a customer. For eg. If the goods do not
meet the buyer's specifications and are returned.

Debit note or Debit memo is a transaction that reduces Amounts Payable to a vendor because you send damaged goods back to

your supplier.The main function of a debit note is to provide a secondary document to the buyer that calls attention to a debt. A
debit note sometimes is helpful when an invoice is misplaced or never reaches the buyer, as the document provides the buyer
with everything he or she needs to settle the outstanding debt.

Format:

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Form or letter sent by a seller to a buyer, stating that a certain amount has been credited to the buyer's account. Also called

credit memo, it is issued in various situations to correct a mistake.

The typical debit note is in the form of a letter or some type of document format that is implemented by the company to serve
as a reminder. Collection letters that are sent out when an invoice is not paid within terms often use a simple “reminder” letter

format that calls attention to the fact that the amount owed has not been paid. As time goes on and the balance remains unpaid,
×
the verbiage of the debit note may shift from a friendly reminder to a demand for payment.

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10/8/22, 6:12 PM Define Debit note and Credit note.

DEBIT IS A PURCHASE RETURNS:

Debit note is a document prepared by Business sent to the supplier. It is issued in various situations to correct a mistake, such

as when (1) an invoice amount is overstated, (2) correct discount rate is not applied, (3) goods spoil within guaranty period, or
(4) they do not meet the buyer's specifications and are returned.

Debit note contains returnable goods Qty, reasons for returns

CREDIT NOTE IS A SALES RETURNS:

Credit note is a document prepared by customer sent to the business.

Credit note contains returnable goods Qty, reasons for returns

Note:

To block the credit or debit memo request from being billed in Customizing.

Go to Sales -> Sales Documents -> Sales document header -> Define sales document type and select the billing block field in
the billing section.

This request can later be reviewed along with similar ones, - if necessary, by another department. The request for a credit or
debit memo can then be approved or rejected.

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Comments

10 Apr 2010 8:09 am Guest

when we made a sales bill to the customer , the rate of the quantity mentioned is less than the rate mentioned in price

list.Please give me the suggestion.

17 Oct 2012 11:05 am Guest

we have supplied material to our customer.Transportation charges have to be paid by them but they had not paid it.Please
suggest me whether to send credit note or debit note.

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