Business

Difference between Debit Note and Credit Note




  •  Main Difference

    The main difference between a debit note and credit note is that the first document that is given by the buyer to the vendor when they return goods whereas, credit note is provided by the vendor to the buyer when the deal completes.

    Comparison Chart

    Basis of Distinction Debit Note Credit Note
    Definition The document required for seeking financial help from any source. Tells the final level of the money given by the organization to the seeker.
    Significance Payment made from the account of the person buying something to the account of the company making tools. A payment that exists within the account of the maker and approves by the bank.
    Ink Uses blue ink for giving out the information since it is not a final value or document. Uses red ink since it comes from a recognized authority that gives the final value.
    Amount Always shows the definite amount. Always shows the negative amount.

    Debit Note

    Several factors come into consideration while talking about the debit note, such as the limit of the maximum amount offered to the buyer or any wrong values of the system that come into contention once the summary is received. It does not have any contractual significance because it just informs the vendor that the goods are returned or consumed. This term only becomes useful when we talk about business conditions, and in general, does not have any relevance to a person. People may confuse it as the income statement of an individual or the bank balance slip, but they are different from a debit note. It involves deals such as a company may send the order to the buyer even before they get the payment. Or get the money before any tools deliver to the other group. These notes help to keep track of all the money matters involved within a deal and therefore no real payment moves between banks until the debit and credit score settles. Another way of looking at this term is the receipt of something we buy from the market, if we pay for it, then it becomes the payment note if we do not pay for it, and just take something to pay for a later time, then it becomes a debit note.

    Credit Note

    This document is similar to a pay slip or the bank statement that the authority issues to inform about the real worth in someone’s account. Another way to look at it becomes the money that we pay to buy something, in return, the receipt tells us the actual value of the good we have purchased, and then we pay for it looking at the total money. This example helps to determine the difference between credit and debit note as the actual amount of the good becomes equal to the real value of products or goods that they buy. Another case where we have its application is when we buy something, and it does not qualify as a quality product, if we have to return or claim the warranty, then we have to make sure the actual receipt that had the amount written is with us. It has different things mentioned in the document that includes the date, the value, the address of the person, the exact location from where the item was sent, the post office box number, the terms of the agreement and mostly includes the list of products along with their price.

    Key Differences

    • Debit notes explain the payment made from the account of the person buying something to the account of the organization. Whereas, Credit note becomes an amount that exists within the account of the maker and approved by the bank.
    • Debit note uses blue ink for giving out the information since it is not a final value or document whereas Credit note uses red ink since it comes from a recognized authority that gives the closing cost.
    • Debit note always shows the actual amount, that is, the money that a person has in their account to pay to the other. Credit note still indicates the negative number, that is, the money that a person will have in their bank account once the payment comes through.
    • The purchase books are checked when we want a debit note, and sales return books are checked when we want a credit note.

    Video Explanation