Both debit notes and credit notes are official accounting documents, both used by businesses but for different purposes.
- Separate from an invoice, these notes let buyers know how much existing business credit they have or conversely, how much they still owe (udhari aur baqaya).
- They’re also critical to shipment tracking, payments due or if any credit remains on the account.
Debit note or debit memo
A debit note, or a debit memo, is a document issued by a seller to a buyer to notify them of current debt obligations.
- Used in B2B and B2C transactions.
Credit note or credit memo
A credit note is a document issued by a seller to a buyer to notify that credit is being applied to their account. As a seller, you may issue a credit note when there’s a need to cancel all or part of an invoice for a variety of reasons, including:
- Changes to an order after an invoice is issued
- Goods returned or services rejected
- Goods were damaged during shipping
- Pricing mistakes on the original invoice