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How to Add Debit Note

Overview​

Creating a debit note records the amount being debited from the supplier and adjusts your accounts payable. Debit notes can be created for full bill cancellations or partial adjustments for specific items.

Prerequisites​

  • User has Finance module access
  • Supplier exists with at least one bill
  • Bill details available for reference
  • Reason for debit note documented
  • Approval obtained for high-value debits (if required)

Step-by-Step Guide​

Step 1: Navigate to Debit Note​

From the left sidebar, expand Finance and click Debit Note.

On the Debit Note list page, click + Add Debit Note button.

Step 2: Select Supplier​

Supplier Name Field:

  • Click the dropdown or search box
  • Type supplier name to filter
  • System shows matching suppliers
  • Select the supplier receiving debit

The system displays supplier details including GSTIN and registered address for verification.

Step 3: Select Bill​

Bill# Field:

  • Dropdown shows all unpaid/partially paid bills for selected supplier
  • Format: Bill number with date and amount
  • Select the bill being debited

Once selected, the system loads:

  • Bill date and amount
  • Original bill items
  • Billing and shipping addresses
  • GST details

Step 4: Choose Debit Note Type​

Debit Note Type Dropdown:

Two options available:

Full Debit:

  • Debits entire bill amount
  • All line items automatically included
  • Use for: Complete order return, full rejection, bill voiding
  • Items section auto-populates with all bill items

Partial Debit:

  • Debits selected items or quantities
  • Manually specify which items and quantities
  • Use for: Partial returns, specific defective items, selective price adjustments
  • You control which items to debit

Step 5: Select Reason​

Reason Dropdown:

Choose the appropriate reason:

  • Purchase Return - Goods returned to supplier
  • Defective Goods - Quality issues with products
  • Price Adjustment - Pricing corrections or excess charges
  • Billing Error - Bill calculation mistakes
  • Short Delivery - Partial delivery but full amount charged

The selected reason appears on the debit note document and helps track debit patterns.

Step 6: Configure Debit Note Details​

Debit Note Date:

  • Auto-filled with today's date
  • Format: DD/MM/YYYY
  • Can be changed if needed
  • Determines accounting period for debit

Debit Note#:

  • Auto-generated format: DN-XXX
  • Click edit icon to customize
  • Must be unique
  • Cannot be changed after saving

Reference Number:

  • Optional field
  • Enter supplier's return acknowledgment or reference
  • Helps cross-reference with supplier records

Notes:

  • Large text area for additional information
  • Document specific details about the debit
  • Visible on debit note PDF
  • Example: "Debit for 15 defective units returned to supplier on 05/10/2025"

Step 7: Review Items Tab​

System auto-populates based on debit type selected:

For Full Debit:

All bill items appear with:

  • Item Name: Product description
  • Original Qty: Quantity from bill
  • Debit Qty: Same as original (full debit)
  • Unit Price: Price from bill
  • Discount(%): Discount from bill
  • GST Rate: Tax rate from bill
  • Amount: Calculated debit amount per line

All quantities pre-filled. Review for accuracy.

For Partial Debit:

Items table is editable:

  • Item Details: Select items being debited from dropdown
  • Original Qty: Shows quantity from bill (read-only)
  • Debit Qty: Enter quantity being debited (editable)
  • Unit Price: Auto-filled from bill
  • Discount(%): Apply additional discount if needed
  • GST Rate: Tax rate from original bill
  • Amount: Auto-calculated based on debit quantity

Modifying Items:

  • Change Debit Qty to adjust debited quantity
  • Delete line items not being debited (trash icon)
  • Add additional items using (+) icon if needed

Step 8: Review Billing and Shipping Address​

System displays addresses from bill:

Billing Address:

  • Your company's billing location
  • Includes GSTIN
  • Used for GST calculation

Shipping Address:

  • Supplier's delivery location
  • Matches original bill
  • Verify for inter-state vs intra-state GST

These are read-only from bill. If address needs correction, adjust in supplier master.

Step 9: Review Totals​

Summary section displays:

Sub Total:

  • Sum of all debited line items before tax
  • Base amount being debited

Total Tax:

  • GST amount being debited
  • Broken down by CGST, SGST, or IGST
  • Calculated proportionally based on debited items

Total Debit Amount:

  • Final debit note value
  • Sub Total + Total Tax
  • This amount will be available for applying to future bills

Verify calculations match expectations before submitting.

Step 10: Add Terms & Conditions (Optional)​

Terms & Conditions Section:

  • Located below items table
  • Free text area
  • Add debit note specific terms
  • Example terms:
    • "This debit note is valid for 90 days"
    • "Debit can be applied to future bills only"
    • "Goods must be collected from warehouse within 7 days"

Step 11: Attach Documents (Optional)​

Documents Tab:

  • Click Documents tab next to Items tab
  • Upload supporting files:
    • Goods return delivery challan
    • Quality inspection report
    • Supplier email acknowledging return
    • Photos of defective items
  • Supported formats: PDF, Excel, Word, Images
  • Files stored in Vault under Debit Note folder

Step 12: Save Debit Note​

Three options:

Cancel:

  • Discards all entered information
  • No debit note created
  • Returns to debit note list

Save as Draft:

  • Saves debit note without submitting
  • Status remains Draft
  • Can edit or delete later
  • No accounting impact yet
  • Use when: Information incomplete, awaiting approval

Submit:

  • Creates final debit note
  • Status changes to Pending
  • Accounting entries posted
  • Debit note number locked
  • Cannot be edited (only cancelled if needed)
  • Debits available for application

After submission, system displays success message and debit note detail view opens.

Verification​

Confirm debit note created correctly:

  • Debit note appears in Debit Note list with Pending status
  • Debit amount matches expected value
  • Supplier name and bill reference correct
  • All debited items listed accurately
  • GST calculation proportional to original bill
  • Reason documented properly
  • Supporting documents attached

Next Steps​

After creating debit note:

  1. Download PDF: Generate debit note document for supplier
  2. Apply Debits: Link debit to outstanding bills
  3. Email Supplier: Send debit note via email
  4. Update Records: Note debit in supplier communication log

Common Scenarios​

Scenario 1: Full Order Return​

Goods received were completely defective, returning full order to supplier.

  1. Select supplier and bill
  2. Choose Full Debit type
  3. Select reason: Defective Goods
  4. Add note: "All units defective, returning full order to supplier"
  5. Attach return delivery challan
  6. Submit debit note

Debit creates for full bill amount. Apply to bill to zero out balance.

Scenario 2: Partial Defective Goods​

Received 100 units, 15 were defective and returned.

  1. Select supplier and bill
  2. Choose Partial Debit type
  3. Select reason: Defective Goods
  4. In Items tab, find the item
  5. Change Debit Qty from 100 to 15
  6. Add note: "Debit for 15 defective units returned to supplier, keeping remaining 85 units"
  7. Attach quality report photos
  8. Submit debit note

Debit creates for 15 units only. Remaining bill amount stays payable.

Scenario 3: Price Correction​

Bill charged wrong price, supplier agreed to correct amount.

  1. Select supplier and bill
  2. Choose Partial Debit type
  3. Select reason: Price Adjustment
  4. In Items tab, adjust Unit Price to difference amount
  5. Or add discount percentage to correct
  6. Add note: "Price correction as per revised quotation dated 01/10/2025"
  7. Submit debit note

Debit reduces bill by price difference. Pay corrected balance to supplier.

Tips & Best Practices​

Pro Tips

Always verify bill number carefully before creating debit note to avoid debiting wrong bill

Use Notes field generously to document specific circumstances for future reference and audit trail

For partial debits, double-check Debit Qty matches physically returned quantity to avoid discrepancies

Attach all supporting documents at creation time rather than later for complete documentation

Review GST amounts carefully for inter-state vs intra-state transactions to ensure compliance

Create draft debit notes for high-value items to get internal approval before finalizing

Send debit note PDF to supplier immediately after creation for transparency and faster acceptance

Troubleshooting​

Issue: Supplier not showing in dropdown

  • Verify supplier exists and is active
  • Check spelling when searching
  • Ensure supplier has at least one bill
  • Contact admin if supplier needs to be created

Issue: No bills available for supplier

  • Confirm supplier has unpaid or partially paid bills
  • Fully paid bills won't appear in dropdown
  • Check if debit note already created for the bill

Issue: Items not appearing in Full Debit mode

  • Verify bill selected has line items
  • Check if bill loaded correctly
  • Try refreshing page and selecting bill again

Issue: GST calculation seems incorrect

  • Verify supplier's GST state matches billing state
  • Check if HSN codes on items are correct
  • Confirm item-level GST rates match bill
  • For inter-state, should show IGST; intra-state shows CGST+SGST

Issue: Cannot edit debit note after saving

  • Debit notes cannot be edited once submitted
  • If changes needed, mark existing debit note as cancelled
  • Create new debit note with correct information
  • Or apply debits to adjust bill balance differently

Need help? Contact support at support@bizconnekt.com