What is Debit Note?

A Debit Note is a commercial document issued by a buyer to a seller, formally notifying the seller that their account is being debited. It is typically used when a buyer returns goods to a seller. It acts as a request for the seller to issue a credit note.

For Startups: For a D2C or manufacturing startup, issuing or receiving debit notes is a common part of managing supplier and customer returns. From an accounting perspective, a debit note from a customer signals a sales return, which reduces revenue. A debit note sent to a supplier reduces accounts payable.

Example: A startup receives a shipment of raw materials that are defective. The startup sends the materials back to the supplier along with a debit note, indicating that it is reducing the amount it owes to the supplier for the returned goods.