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Debit Note vs. Credit Note: What's the Difference?

Edited by Aimie Carlson || By Harlon Moss || Updated on October 12, 2023
A debit note is a document sent by a buyer to inform the seller of a debit being made to the seller's account. A credit note is sent by a seller to notify the buyer about the credit being applied to the buyer's account due to returned goods.

Key Differences

In the realm of financial transactions, a debit note stands as a formal document indicating a request for additional charge towards the buyer's account. On the contrary, a credit note is a document issued by a seller to a buyer, denoting a reduction in the amount that is payable due to previous overcharges or returned goods. Each serves as a record for transactions that diverge from the original invoice, yet they stand in contrast due to the directionality of the financial adjustment.
A debit note is typically issued in instances where additional costs have been incurred by the seller after an invoice has been sent, and these costs need to be passed on to the buyer. In contrast, the credit note plays a vital role when the buyer returns goods or services, or in cases where the buyer was overcharged in a previous invoice, as it serves to either reduce the amount payable or indicates that the seller owes the buyer for the specified amount.
Focusing on the utility of a debit note, it essentially is an intimation sent to a person or company to inform them regarding the debit against their account, enhancing the transparency and traceability of financial transactions. Meanwhile, the credit note is considered an important document for maintaining meticulous financial records and ensuring the accuracy and integrity of accounting processes, particularly in maintaining clear and unequivocal records of reductions in amounts payable by buyers.
Upon sending a debit note, the seller’s account is credited, signifying an increment, while the buyer’s account is debited, denoting a debt or an amount payable. In juxtaposition, when a credit note is issued, the seller’s account is debited (indicating a reduction in the receivable amount), and the buyer’s account is credited, showcasing a decline in the amount payable or an amount owed to the buyer by the seller.
In the context of establishing healthy buyer-seller relationships, a debit note acts as a testament to the transparency, communicating any additional charges or adjustments effectively to the buyer. Conversely, a credit note signifies ethical practice from the seller's end, ensuring that any excess payments or returns are adequately accounted for and communicated to the buyer, preserving trust and ensuring accurate financial dealings between the two entities.

Comparison Chart


To indicate an increase in the amount payable by a buyer
To signify a reduction in the amount payable by a buyer

Effect on Accounts

Credits the seller’s account and debits the buyer’s
Debits the seller’s account and credits the buyer’s

Typical Use Case

Additional charges incurred after an invoice has been sent
Returned goods, overcharging, or early payment by the buyer



Impact on Relationship

Signifies transparency in charging additional costs
Demonstrates ethical practice in returning overcharges or handling returns

Debit Note and Credit Note Definitions

Debit Note

Debit notes are typically issued when there are extra charges incurred after an invoice has been sent.
The import duties were not included in the original invoice, necessitating a debit note to cover the costs.

Credit Note

Credit notes serve to officially recognize and document returns from a buyer.
The seller provided a credit note for the returned items, ensuring accurate financial records.

Debit Note

Debit notes act as a formal communication to the seller about the buyer's account being debited.
A debit note was issued to formally notify the seller of additional costs due to specification changes.

Credit Note

Credit notes can act to rectify billing errors in favor of the buyer.
To correct the invoicing mistake, the supplier issued a credit note to the client.

Debit Note

A debit note serves to adjust the amount due in circumstances of undercharging.
The seller overlooked the taxes in the invoice, thus, a debit note was issued to correct the error.

Credit Note

A credit note is a document issued by a seller to reduce the amount the buyer owes.
After recognizing an overcharge, the company issued a credit note to the buyer.

Debit Note

A debit note is a document signifying an increase in the amount a buyer owes to a seller.
The buyer sent a debit note to reflect the additional charges for the expedited shipping requested.

Credit Note

A credit note may offer a buyer a discount on future purchases.
The retailer issued a credit note as a gesture of goodwill, offering a discount on the next order.

Debit Note

In accounting, a debit note can correct a previous invoice or account for additional charges.
The buyer issued a debit note to resolve the discrepancy between the received goods and the invoiced amount.

Credit Note

A credit note acts as an acknowledgment of a seller owing the buyer due to overpayment.
The buyer received a credit note to confirm the overpayment from the last transaction.


Can a credit note signify a discount?

Yes, credit notes can be used to offer discounts or reductions on future purchases.

How does a credit note function?

A credit note reduces the amount a buyer owes to a seller or acknowledges a seller’s debt to a buyer.

What is a debit note?

A debit note is a document indicating a rise in the amount a buyer owes to a seller.

What should a debit note typically include?

A debit note should include details like amounts, reasons for issuance, and relevant invoicing details.

Can a debit note be reversed?

Yes, a debit note can be reversed or adjusted with a subsequent credit note if needed.

In what scenario would a seller issue a credit note?

A seller issues a credit note to acknowledge overcharging, returns, or to offer a discount to a buyer.

Is it mandatory to issue a debit note for additional charges?

While practices vary, issuing a debit note for additional charges ensures transparent and accurate financial dealings.

Can a credit note be converted to a refund?

Yes, a credit note can be used to adjust future purchases or be converted into a refund for the buyer.

What is the impact of a debit note on financial accounts?

A debit note increases the buyer’s accounts payable and raises the seller’s accounts receivable.

How does a credit note correlate with returned goods?

A credit note is often issued to document and validate the financial implications of returned goods.

Can a credit note be issued after payment is made?

Yes, a credit note can be issued after payment, offering a refund or discount on future transactions.

When is a debit note typically issued?

A debit note is issued when additional charges occur after an invoice is sent or to correct undercharging.

What does a debit note communicate to a seller?

A debit note communicates that the buyer’s account is being debited, increasing the amount owed.

Is a credit note a confirmation of payment received?

No, a credit note confirms a reduction in the amount payable or indicates a seller’s debt to a buyer.

Who usually sends a debit note?

A debit note is typically sent by a buyer to a seller to inform about the additional charge or correction.

Can a debit note result in an increased payable amount?

Yes, a debit note usually results in an increase in the amount payable by the buyer to the seller.

How does a credit note affect accounting records?

A credit note decreases the seller’s accounts receivable and reduces the buyer’s accounts payable.

How does a credit note benefit the buyer?

A credit note benefits the buyer by reducing amounts payable or acknowledging amounts receivable.

How does a credit note impact buyer-seller relations?

A credit note reflects ethical practice, potentially enhancing trust and goodwill in buyer-seller relationships.

Why is a debit note crucial in financial documentation?

Debit notes ensure accurate financial recording by documenting additional charges or corrections clearly.
About Author
Written by
Harlon Moss
Harlon is a seasoned quality moderator and accomplished content writer for Difference Wiki. An alumnus of the prestigious University of California, he earned his degree in Computer Science. Leveraging his academic background, Harlon brings a meticulous and informed perspective to his work, ensuring content accuracy and excellence.
Edited by
Aimie Carlson
Aimie Carlson, holding a master's degree in English literature, is a fervent English language enthusiast. She lends her writing talents to Difference Wiki, a prominent website that specializes in comparisons, offering readers insightful analyses that both captivate and inform.

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