A debit note records an adjustment by a supplier of the amount owed to that supplier by a business. Typically, a debit note is created in response to a credit note received by the business from a supplier, although not all supplier credits are formally documented. Debit notes are internal; that is, they are not normally provided to the supplier. They might be for:
A debit note makes all necessary corrections to inventory, expense, and tax accounts. It does not record actual receipt of money from the supplier, but only adjusts the supplier’s balance in Accounts payable. A debit note can be created regardless of whether the supplier has yet been paid for the goods or services.
A debit note should not normally be used if the original transaction was a cash purchase, because the purchase will not have been recorded in the supplier’s subaccount in Accounts payable. In such situations, a direct receipt should usually be entered in the Receipts & Payments tab. In these cases, enter quantities returned to the supplier as negative numbers. However, if the cash seller has also been defined as a supplier and offers an account credit rather than a cash refund, a debit note may be used.
Before debit notes can be created, the Debit Notes tab must be enabled. Click Customize below the left navigation pane, check the box for Debit Notes, and click Update below the list:
In the Debit Notes tab, click on New Debit Note:
Complete the form:
By default, today’s
Issue date is prepopulated. Normally, this date is edited to match the date of the supplier’s credit note.
Reference can be used to enter the supplier’s credit note number. If the box within the field is checked, Manager will assign a number automatically. The program will find the highest number among all existing debit notes and add 1.
If automatic sequencing is used, the number assigned will be higher than any previously assigned number, including suppliers’ numbers. Therefore, best practice is to use either all suppliers’ numbers or all automatic numbers.
A previously defined
Supplier must be selected in the dropdown box.
After a supplier has been selected, an optional
Invoice field appears. If the debit note applies to a specific invoice, select it from the dropdown list:
Line items being returned or adjusted can be completed semi-automatically by selecting predefined inventory or non-inventory items in the
Item field and entering quantities. Or, they may be entered manually.
Tax codes can be selected.
A Tracking Code can be selected, if they have been defined.
Additional lines can be added 1, 5, 10, or 20 at a time.
Save the transaction by clicking Create:
Debit notes can also be copied from purchase invoices. While viewing a purchase invoice, click Copy to and select New Debit Note:
If a supplier refunds the credit balance, receive money into a bank or cash account, allocating the refund to Accounts payable and the supplier’s subaccount. When a receipt is recorded, the balance of Accounts payable to the supplier will move in the positive direction: