A debit note records an upward adjustment or a claim that an account should be debited. The exact use depends on who issues it and the accounting process followed by the two businesses.
For example, a seller may use a debit note to document an amount left out of an earlier invoice. A buyer may use one to tell a supplier that goods were returned or that the supplier's account should be reduced.
Because businesses do not always use the term in exactly the same way, the document must state the reason clearly.
Debit note vs invoice
An invoice is the main document a seller uses to charge for goods or services. A debit note usually adjusts or disputes an existing transaction.
| Document | Main purpose |
|---|---|
| Invoice | Records the main charge and requests payment |
| Credit note | Reduces an amount previously invoiced |
| Debit note | Records an additional debit or a buyer's claim against a supplier |
Common uses of a debit note
- correcting an undercharge
- adding an approved cost omitted from the original invoice
- recording a buyer's return of goods
- documenting a price difference
- allocating an additional intercompany charge
Before issuing one, confirm whether the other business expects a debit note, a supplementary invoice or another document. Their accounting system may have a specific process.
What should a debit note contain?
- the heading Debit Note
- a unique debit note number
- issue date
- names and addresses of both businesses
- reference to the original invoice, LPO or contract
- a clear reason for the adjustment
- itemised amount
- VAT information where applicable
- the action expected from the recipient
Use a separate sequence such as DN-2026-0001.
Debit note example for an undercharge
Assume a supplier invoiced ₦400,000, but the approved amount for the delivered work was ₦450,000. The seller and customer confirm that the missing ₦50,000 should be charged.
DEBIT NOTE
Debit Note Number: DN-2026-0003
Original Invoice: INV-2026-0064
Reason: Approved installation charge omitted from original invoice
| Description | Amount |
|---|---|
| Installation charge | ₦50,000 |
| VAT at 7.5%, where applicable | ₦3,750 |
| Additional amount | ₦53,750 |
The recipient may ask the seller to issue a supplementary invoice before payment. Follow the customer's documented process.
Debit note example for returned goods
A buyer returns goods worth ₦120,000 to a supplier and sends a debit note stating:
Debit Note DN-2026-0011 against Invoice INV-2026-0208. Three damaged units returned on 20 July 2026. Amount claimed: ₦120,000 plus the related VAT adjustment where applicable.
The supplier may then confirm the return and issue a corresponding credit note.
VAT and accounting records
Keep the debit note with the original invoice, delivery records and any correspondence approving the change. If VAT changes, make sure the adjustment is treated correctly in both businesses' records.
The correct tax and accounting treatment can depend on who issued the note and why. Get professional advice for material adjustments.
Debit note checklist
- explain whether it is an extra charge or a buyer's claim
- quote the original invoice or LPO
- show the calculation clearly
- use a unique number
- show VAT only where it applies
- state what the recipient should do
- keep the supporting documents
Read the credit note guide for downward adjustments and the LPO guide for procurement references. You can create the main invoice online.