Credit Note vs Debit Note
Credit notes reduce what the buyer owes. Debit notes charge the seller for something. Same format, opposite direction.
At a glance
| Criterion | Credit Note | Debit Note |
|---|---|---|
| Issued by | Seller | Buyer |
| Effect | Reduces amount owed by buyer | Charges the seller |
| Typical trigger | Over-billing, quality claim | Short delivery, demurrage recovery |
| Tax treatment | Reduces seller VAT/GST output | Increases seller VAT/GST output |
| Netting | Applied to future invoices | Applied to future invoices |
Use Credit Note when
Use a credit note when the seller acknowledges the buyer was over-charged.
Get the Credit Note template →Use Debit Note when
Use a debit note when the buyer needs to recover cost or shortfall from the seller.
Get the Debit Note template →Credit Note vs Debit Note: Key Differences
Credit notes reduce what the buyer owes. Debit notes charge the seller for something. Same format, opposite direction.
Numerical Example: Credit Note vs Debit Note
Credit notes reduce what the buyer owes. Debit notes charge the seller for something. Same format, opposite direction.
Use Case(Credit Note)Use a credit note when the seller acknowledges the buyer was over-charged.
Alternative(Debit Note)Use a debit note when the buyer needs to recover cost or shortfall from the seller.
Best ChoiceDepends on your specific needs
Source: SSLT Global Editorial - Credit Note vs Debit Note
Last reviewed: October 2026
FAQ
Can both parties issue notes for the same shipment?
Yes. A quality dispute can produce a buyer debit note and a seller credit note that partially cancel.
Do notes need the same tax reference as the original invoice?
Yes in most jurisdictions - the tax authority links notes back to the original invoice for VAT/GST accounting.