Debit note processing is the handling of documents that record an adjustment in the issuer's favour between trading partners. The most common case is on the buyer's side: when goods are returned, short-delivered, damaged or overcharged, the buyer's accounts payable team raises a debit note, also called a debit memorandum, telling the supplier that its account has been debited and asking for a matching credit note. A seller may also issue a debit note to charge a customer an extra amount, such as an undercharge on an earlier invoice.
The workflow starts with evidence from goods receipt matching or a price check. The note is approved, numbered, posted to the supplier ledger and sent. It stays open until the supplier's credit note arrives and is matched, or the amount is deducted from the next payment. Disagreements are handled as a disputed invoice. The seller's side is described under credit note processing.