Debit Memo: Meaning and Examples

A debit memo (short for debit memorandum) is a document that increases the amount one party owes another on a previously issued invoice or account. It is the opposite of a credit memo. A seller issues one to add a charge that was left off or under-billed on an earlier invoice; a buyer issues one to a supplier to claim money back for a return or a billing error; and a bank posts one to lower an account balance for a fee. In every case the message is the same: the balance owed just went up (or the bank balance went down). Last updated July 2026.

This guide explains what a debit memo is, the three settings it shows up in, how it differs from a credit memo and from a plain invoice, the accounting on both sides, a worked example with journal entries, and how to process one in accounts payable without paying a charge you should have disputed. It is written for US finance and AP teams working in USD.

What is a debit memo?

A debit memo is a written notice that adjusts an account balance upward for the party being billed. The word memorandum matters: it is a short adjustment note tied to an existing transaction, not a full standalone invoice. Depending on who issues it, a debit memo either raises what a customer owes a seller, records a claim a buyer is making against a supplier, or documents a bank charge against a depositor.

The common thread is direction. A debit memo always moves the balance in the debit direction for the recipient's account with the issuer. If you are the customer and your vendor sends one, you owe more. If you are the depositor and your bank sends one, your cash went down. That single rule clears up most of the confusion around the term.

What is a debit memo used for?

A debit memo is used to correct an under-billing or record a new charge against an existing account without cancelling and reissuing the original invoice. It keeps the audit trail intact: the first invoice stays as it was, and the memo documents the extra amount and the reason. That is cleaner than editing a sent invoice, which destroys the record of what was originally billed.

The three settings where debit memos appear each use them a little differently, so it helps to separate them before going deeper.

What is a debit memo in accounting?

In accounting, a debit memo increases a receivable on the seller's books and a payable on the buyer's books, or it reduces cash when a bank issues it. The seller debits accounts receivable and credits revenue for the additional amount; the buyer debits the relevant expense or asset and credits accounts payable. Nothing about the original invoice changes: the memo posts as its own transaction referencing that invoice.

This is exactly the mirror image of a credit memo, which reduces a receivable and a payable. If you have already worked through a credit memo, a debit memo is the same mechanics with the signs reversed. The two documents are the standard pair that finance teams use to adjust invoices after they have been sent, and knowing which one moves the balance in which direction is most of the battle.

Why is a debit memo issued?

A debit memo is issued when a charge needs to be added to or claimed against an account that already has an invoice on it. On the sell side, the trigger is almost always an under-billing: the wrong (lower) price went out, freight got left off, a quantity was under-counted, or a contracted rate stepped up mid-term. Rather than void a clean invoice, the seller sends a memo for the difference.

On the buy side, a debit memo is a formal claim. When goods come back, arrive short, or arrive damaged, the buyer issues a debit memo (often called a vendor debit memo or supplier debit note) telling the supplier: we are reducing what we pay you by this amount, and here is why. The supplier then confirms it, usually by issuing a matching credit memo on their side. Until that happens, the debit memo is a claim, not a settled adjustment.

What does a debit memo look like?

A debit memo looks like a short invoice focused on a single adjustment. It carries the issuer and recipient details, a unique debit memo number, an issue date, a clear reference to the original invoice or purchase order, the item or reason being charged, the amount, any tax, and the new total effect. The reference to the original document is the field that makes it usable, because without it nobody can match the memo to the transaction it adjusts.

• Document title: "Debit Memo," "Debit Memorandum," or "Debit Note" on the face, so it is not mistaken for a fresh invoice.
• Debit memo number: unique, from its own sequence.
• Issue date: sets the period the adjustment lands in.
• Original invoice or PO number: the anchor that ties the charge to a transaction.
• Reason for the charge: under-billing, freight, return, damage, or fee, stated plainly.
• Amount and tax: the additional charge, with sales tax adjusted in proportion where it applies.
• Issuer and recipient details: legal names, addresses, and account numbers on both sides.

Debit memo vs credit memo

A debit memo increases the balance owed; a credit memo decreases it. That is the whole distinction. A seller sends a credit memo when it over-billed and a debit memo when it under-billed. A buyer receives a credit memo that lowers a payable and issues a debit memo to claim money back from a supplier. The two are designed to work as a pair, which is why they cause so much confusion.

For a full side-by-side with worked cases, see our credit memo vs debit memo comparison. The short version: read the effect on the balance and you will always know which one you are holding.

Debit memo vs invoice

An invoice is the original bill for a complete sale; a debit memo is a follow-on charge that adjusts an invoice already sent. The invoice creates the full obligation the first time, with every line of the order. A debit memo only ever carries the extra amount that the invoice missed, and it points back to that invoice. If you receive a debit memo and cannot find the original invoice it references, that is the first thing to chase, because the memo is meaningless on its own.

Practically, the difference matters when a vendor debit memo lands in your inbox and looks payable. Before treating it as a bill, confirm it ties to a real invoice or PO, that the original was not already corrected, and that the extra charge is legitimate. A debit memo is easy to pay on autopilot precisely because it looks like a small invoice, which is how duplicate and unauthorized charges slip through. Our debit memo vs invoice guide walks through how to tell whether one is actually payable.

What is a bank debit memo?

A bank debit memo is a notice that the bank has reduced your account balance for a charge you owe it, such as a monthly service fee, a non-sufficient-funds charge, a wire fee, or a returned-check fee. It appears on your statement as a debit you did not initiate. During reconciliation you book it as a bank charge (or interest expense) and reduce cash, because the bank has already taken the money.

Bank debit memos are one of the most common reconciling items between the ledger cash balance and the bank statement. They are also easy to miss, since they are the bank's charges rather than your own transactions. Pulling every fee and adjustment off the statement is far quicker once you turn the PDF statement into a clean spreadsheet, so each debit memo lines up against your cash ledger instead of being retyped by hand.

Debit memo in accounts payable

In accounts payable, a debit memo is usually one your team issues to a vendor to claim a deduction: you received the goods short, damaged, or over-priced, and you are telling the supplier you will pay less by that amount. You record it against the vendor as a reduction of what you owe, then match it to the supplier's confirming credit when it arrives. Tracking these claims is what keeps a vendor from being overpaid.

The other AP case is a debit memo the vendor sends you for an under-billing on their side. Here the discipline is to verify before you pay: confirm it references a real invoice, that you were genuinely under-billed, and that it is not a duplicate of a charge you already settled. Vendor debit memos that get paid without a three-way check against the purchase order and receipt are a classic source of overpayment.

Debit memo journal entry example

Say a supplier under-billed you $200 (plus $16 sales tax) for freight on an inventory order and sends a debit memo for $216. On your books as the buyer, you increase the payable and the cost of what you bought:

Dr  Inventory / Freight-in        200.00
Dr  Sales tax (per your policy)    16.00
    Cr  Accounts payable                   216.00

On the seller's books, the mirror entry books the additional revenue and the receivable:

Dr  Accounts receivable           216.00
    Cr  Revenue                            200.00
    Cr  Sales tax payable                   16.00

For a bank debit memo of a $35 service fee, the depositor simply records the charge and reduces cash: debit bank charges $35, credit cash $35. Note that in the US a buyer typically capitalizes vendor-charged sales tax into the item cost rather than booking it as recoverable, so the exact tax line follows your own policy. For the full set of paired entries including returns and already-paid invoices, see our credit memo journal entry guide.

How to process a debit memo without overpaying

The single control that matters is matching. Every debit memo, whether you issue it or receive it, should tie back to an original invoice or purchase order and a receiving record before it affects a balance. On a vendor debit memo you receive, that means a three-way check: does the extra charge agree with the PO price and the quantity actually received? On a debit memo you issue, it means documenting the return authorization or the short-shipment count so the supplier honors the claim.

None of this is hard on one memo. It gets hard at a few hundred a month across dozens of vendors, where each debit and credit memo arrives as a PDF in its own layout and someone has to read it, find the referenced invoice number, key the amount, and check the tax. That retyping is where charges get paid twice or claims get dropped. Our invoice data extraction software reads debit memos, credit memos, and invoices, including scans, and returns the fields as structured data in Excel, CSV, or JSON: document number, date, referenced invoice, vendor, amount, tax, and total. You still decide whether a charge is legitimate and how to post it. What it removes is the keying, which adds no value and causes most of the errors.

Frequently asked questions

Is a debit memo the same as an invoice? No. An invoice bills the full original sale; a debit memo adds a follow-on charge to an invoice that was already sent and always references it. A debit memo never stands alone.

Does a debit memo increase or decrease what I owe? A debit memo increases what the recipient owes the issuer. The one exception in wording is a bank debit memo, which decreases your bank balance, but the principle is the same: it moves money in the bank's favor.

Who issues a debit memo? A seller issues one to bill a customer for an under-charge, a buyer issues one to claim money back from a supplier, and a bank issues one to charge a depositor a fee. The direction of the adjustment tells you which case you are in.

What is the difference between a debit memo and a debit note? None in practice. "Debit note" is the term used more often in international and buyer-to-supplier contexts, while "debit memo" is common in the US and in banking. Both describe the same document.