What is a debit note?
Published
A debit note is the credit note's opposite: it increases the value of a previously issued invoice, referencing it and adjusting the tax. The pair - credit for reductions, debit for increases - is the complete statutory toolkit for correcting an issued invoice in either direction without touching it.
When the seller issues one
- Under-billing: a lower price or quantity than agreed (billed 145 instead of the agreed 152, say).
- Additional agreed costs after invoicing: freight, installation, extra hours.
- A contractual price-escalation difference.
Example: an invoice issued at 10,000 + 1,500 VAT, then an additional installation service of SAR 800 is agreed:
Debit note = 800 + 120 VAT = SAR 920Seller's entry: Receivables 920 / Revenue 800 + Output VAT 120
The second usage: the buyer-issued debit note
In practice the term also names a document the buyer sends the supplier, notifying them of a reduction to their balance - on returning goods or disputing a billing difference - and requesting a formal credit note in exchange. The buyer's document is a communication and claim tool; the tax-adjusting document remains what the seller issues. Confusing the two roles produces double-recording.
Common mistakes
| Mistake | Effect |
|---|---|
| Issuing a fresh standalone invoice for the difference | The link to the original invoice breaks and the settlement becomes hard to trace |
| Forgetting the VAT on the increase | Output tax understated on the return |
| Recording the buyer's internal note as a tax document | Double-counting against the supplier's incoming credit note |
Frequently asked questions
When a new invoice, and when a debit note?
A new independent supply = a new invoice. A correction or addition to an invoiced supply = a debit note with its reference. The test: is there an existing invoice being adjusted?
Is the debit note subject to e-invoicing?
Yes - notes linked to invoices fall under e-invoicing rules in creation, format, and linkage exactly as invoices do.