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What is a Debit Note?

A debt note informs a person of money owed.
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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 27 September 2014
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Debit notes are documents that provide a debtor with information regarding an outstanding debt. They are issued by the lender or creditor and serve 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.

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 note may shift from a friendly reminder to a demand for payment.

Some companies choose to make use of a format for the debit note that is not a letter. Instead, the note may take the form of a postcard or a payment slip that is very similar to an invoice. Packing slips that include a schedule of charges for goods delivered are one example of a debit note that is not a letter format, but does include information about how much the buyer owes to the seller.

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The main function of this document is to provide a secondary document to the buyer that calls attention to a debt. It 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.

At the same time, it is important to note that a debit note is not an official invoice. The note does not necessarily include any information about the terms of payment or provide details about modes of payment that are acceptable to the seller. It is not unusual for a note to include contact information for the seller, such as a mailing address, telephone number or an email address.

It is possible for a customer to never receive a debit note at all. Unless the seller routinely sends out a debit note as a precursor to issuing an invoice for goods and services delivered, any customer who promptly pays outstanding invoices is unlikely to need any type of reminder that a payment is due on his or her account.

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Discuss this Article

anon339344
Post 5

Because the customer has the accounts payable, which is credit, he reverses the entry when he returns the purchases and decreases his accounts payable which is debit. That's why he issues a debit note.

Similarly, when the supplier receives the debit note from the customer, he reduces his accounts receivable, which is credit. That's why he issues a credit note.

anon191171
Post 4

Thanks for the information. The information is absolutely correct for me, and really helpful! Thanks a lot!

GeminiMama
Post 3

A debit note is a term usually used in the accounting department. Like the article said, anything from a packing slip to an invoice is considered a debit note. When a company, or person, accepts an item or service not yet paid for they create a debit note.

It is important to understand in the accounting world, debit and credit transactions work opposite than personal purchase transactions. If a manufacturing plant purchases material on credit, they create a debit account; when payments are made the account is credited until zeroed out. However, in personal lives we ‘deposit’ money into bank accounts and then ‘debit’ money to buy things.

anon38810
Post 1

Debit notes are documents that provide a debtor with information regarding an outstanding debt. 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.

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