Credit Note vs Debit Note: Do Not Miss 11 Key Differences

A contractor, irrespective of business, is accountable for issuing both credit and debit notes on different occasions, such as credit sales or credit purchases. Since both sound similar, oftentimes one might get confused. To avoid the surge of hassle, you must have a clear understanding of what debit notes and credit notes are.

The challenge with a credit note and a debit note is which to issue when. To quickly answer this, we have two scenarios.

This is not the end of the story; there is a long list of differences when it comes to credit notes vs debit notes. So check them out and know which to use, when to use, and how to use them.

Table of Content

1. What is a Credit Note?
2. What is a Debit Memo?
3. 11 Crucial Differences Between Credit Notes & Debit Notes
4. FAQs
5. Conclusion

Before discussing the differences in detail, let us put some light and understand both the notes in brief.

What is a Credit Note?

A credit memo, aka a credit note, is a written piece of document created by the contractor to inform the customer about the difference amount the latter party is entitled to receive.

Following are the circumstances under which the sellers issue a credit memo to the customers:

The credit note decreases the accounts payable in the customer account.

To know in-depth details about a credit note, you can go through the linked article. It includes every single piece of information that you must know.

Now that you have a brief idea about a credit memo meaning, let's understand a debit note.

What is a Debit Note?

A debit note or debit memo is an articulated form of purchase return created by the customer to inform the contractor about the amount the latter party has to give to the customer.

Another occasion when the debit memo is issued is when the customer buys goods with a promise to pay after 10 days, and meantime, there is a rise in the price of the raw materials.

Just like a credit note, issuing a debit note also requires reason(s), and the following are part of it:

Other essential information that debit note shows are:

• Date of transaction
• Unique identification number
• Details about the original translation for which the debit note is issued
• Sales tax
• Signature

We have a separate and detailed article specifically written on a debit note or memo. You can go through the article for all the wealth of information.

Now that we have discussed a brief about both credit and debit notes, let's know all the key differences.

11 Crucial Differences Between Credit Notes & Debit Notes

To precisely differentiate debit note vs credit note: Here are a few differentiating pointers. Remember the clear understanding of these notes will inform the buyers how much credit they have or how much they owe to their vendors.

What is the end result?

This is how debit note and credit note is differentiated. We still have concerns, queries, or questions, and we have answered them in the next section.

Conclusion

Both debit notes and credit notes are vital for any business since you would be using them at different times. It is a valuable piece of paper, and you cannot simply issue them without any prior checking or due diligence. We hope this article on debit notes vs credit notes delivers detailed information about both notes.

To create a credit note, you can sign up for a FREE TRIAL. Use this free trial to create unlimited memos and notes. You also get several other features with this free trial. So don't wait and get started.