Bill debit and credit notes

Use bill debit and credit notes to adjust the outstanding balance on a vendor bill — for example, when you receive a price correction, return goods, or negotiate a post-purchase discount.

When to issue
Creating a note
Note type
Date and exchange rate
Amount entry
Reason selection
GST handling
Saving and validation
Impact on bill balance
Journal entry
Tips
Related articles

When to issue

Note type	When to use	Effect on bill
Debit note	The vendor undercharged you, or you need to increase the payable (e.g. additional charges)	Reduces the outstanding amount (you owe less)
Credit note	The vendor overcharged you, or you need to increase what you owe (e.g. returned goods need to be re-invoiced)	Increases the outstanding amount

Note: In the context of bills (accounts payable), a debit note from your side reduces your liability, while a credit note increases it. This is the opposite of how credit/debit notes work on the invoicing (accounts receivable) side.

Creating a note

Open the bill detail page for the bill you want to adjust.
Scroll to the Notes section.
Click the button to add a new debit or credit note.
Fill in the note details and click Create Debit Note or Create Credit Note.

Note type

Choose between Debit Note and Credit Note using the Note Type dropdown. The form title updates to reflect your selection.

Date and exchange rate

Note Date — select the date of the adjustment using the calendar picker. The date cannot be in the future.

Exchange rate for foreign currency bills:

The rate defaults to the original bill's exchange rate.
When you change the note date, the system auto-fetches the historical exchange rate for that date.
A blue panel shows both the Original Rate (Bill Date) and the Note Date Rate side by side for comparison.
You can manually override the note date rate if needed.

For INR bills, the exchange rate is always 1 and is not displayed.

Amount entry

Enter the adjustment amount in the bill's original currency in the Amount field.

For foreign currency bills, a three-column layout shows:

Field	Description
Amount (foreign currency)	The adjustment amount you enter
Note Date Rate (to INR)	The exchange rate used for conversion, editable
Amount (INR)	Auto-calculated from the foreign amount and rate, shown as read-only

Reason selection

Select a reason from the Reason dropdown:

Reason	When to use
Quantity correction	Incorrect quantities on the original bill
Rate change	Price was changed after the bill was issued
Overcharge	Vendor billed more than agreed
Return	Goods returned to the vendor
Discount	Post-purchase discount negotiated
Other	Any other reason — describe in the text field below

Use the optional Reason Description text area to provide additional details.

GST handling

GST fields appear only for domestic vendors (those with a GSTIN on file).

Vendor location	GST fields shown
Same state (Maharashtra)	CGST Rate (%) and SGST Rate (%)
Different state	IGST Rate (%)

Enter the applicable rate. The system calculates the tax amount and adds it to the base amount to show a Total Amount (INR) summary at the bottom of the form.

The summary breaks down:

Base Amount (INR)
CGST, SGST, or IGST amounts (when applicable)
Total Amount (INR)

Saving and validation

Click Create Debit Note or Create Credit Note to save. The form validates:

Amount must be greater than zero
Exchange rate must be greater than zero
Note date is required

Impact on bill balance

Note type	Effect
Debit note	Reduces the outstanding amount on the bill — you owe less to the vendor
Credit note	Increases the outstanding amount on the bill — you owe more to the vendor

The bill's balance updates immediately after saving.

Journal entry

A journal entry is created automatically when the note is saved, recording the adjustment against the appropriate accounts.

Tips

Check the exchange rate. For foreign currency bills, the auto-fetched rate matches the note date. Override it if the agreed rate differs.
Use the correct note type. Debit notes reduce what you owe; credit notes increase it. If unsure, check the descriptions in the when to issue table.
Add a reason description. The free-text field helps during audits and when reviewing old adjustments.
GST rates should match the original bill. Use the same tax rate that was applied on the original bill so the adjustment is consistent.

Save Expense — Upload a bill, categorize expenses, and create a journal entry
Bill payments — Record payments against vendor bills with foreign currency support
Bill-to-Journal Linking — How saved bills connect to journal entries
Chart of Accounts — Set up accounts for categorization

Bill debit and credit notes