The difference between credit notes and debit notes is outlined as follows:
- Credit Note: This is issued by a seller to a buyer to acknowledge that the buyer’s account has been credited due to returned goods, overbilling, or other sales adjustments. It effectively reduces the amount payable by the buyer to the seller.
- Debit Note: This is usually issued by a buyer to a seller indicating a return of goods or an adjustment for goods received. It serves as a formal request for the seller to issue a credit note to the buyer. This document increases the amount payable to the supplier if it relates to purchase adjustments.
In summary, a credit note acknowledges a seller’s credit to the buyer, while a debit note is a buyer’s notification of an amount owed to be credited by the seller.