A debit note is a document created when goods purchased from a supplier need to be returned, whether the original invoice is paid or unpaid. The debit note creates three immediate effects:
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It automatically reflects returned material quantities in inventory upon creation.
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It automatically creates an accounting entry reflecting inventory movement, tax, and supplier account.
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It adds a ‘Returned’ status next to the associated purchase invoice.
First: Steps to Create a Debit Note
1. Navigate to the Purchase Invoices Page Go to Purchases ← Purchase Invoices.
2. Create the Debit Note Click on ‘Debit Notes’ from the top options, then select ‘Create Debit Note’, and fill in the following data:
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Select the supplier you purchased the goods from.
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Specify the debit note issue date.
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Fill in the ‘Original Purchase Invoice Reference’ field. It must consist of letters and numbers only and not exceed 50 characters. If entered incorrectly, the alert will appear: ‘external_parent_reference must consist of letters and numbers only and not exceed 50 characters’.
3. Select Products to Return
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Select the product and enter the quantity to return (you can return part of the invoice, not necessarily all of it).
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You can add terms and conditions or special notes.
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You can upload an attachment such as the original invoice image to save it electronically.
Second: Available Options After Saving the Debit Note
After creating the debit note, a ‘Returned’ status will be added next to the associated purchase invoice. After allocating the debit note or refunding the money, the invoice status changes from ‘Approved’ to ‘Paid’ or ‘Partially Paid’ next to the ‘Returned’ status.
To access the available options: Purchases ← Debit Notes, then select the appropriate action:
View: To review debit note details. If there is a refund or allocation, the details appear below the total, for example: ‘Paid via receipt REC1 2026-03-01’ or ‘Paid via debit note DBN1-Mar-26’.
Print: To print the debit note.
Download PDF: To download the debit note as a PDF.
Allocate Debit Note: To allocate the debit note amount to approved or unpaid invoices.
Unallocate Debit Note: To cancel the previous allocation.
Refund: To create a receipt proving cash or bank refund.
Delete: To delete the debit note.
Third: Different Scenarios After Creating the Debit Note
The procedure after creating the debit note differs based on the status of the original invoice. There are three main scenarios:
Scenario One: Invoice is Fully Paid
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Go to: Purchases ← Debit Notes.
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Click ‘Refund’ next to the debit note.
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Select the account where the refunded amount will be deposited (cash or bank account).
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Click Save; the amount will immediately affect the bank or cash account.
The invoice status will change from ‘Approved’ to ‘Paid, Returned’.
Scenario Two: Invoice is Approved but Unpaid
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Go to: Purchases ← Debit Notes.
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Click ‘Allocate Debit Note’.
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Select the unpaid invoice or invoices and allocate the amount to them.
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You can allocate the amount across multiple invoices until the full amount is exhausted.
The invoice status will change to ‘Paid, Returned’, and the debit note number will appear below the invoice total when reviewed.
️ If the debit note number does not appear below the invoice when clicking View next to the purchase invoice, it means the allocation has not been completed yet.
Scenario Three: Invoice is Partially Paid
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The debit note is allocated to the unpaid portion of the invoice.
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‘Refund’ is used for the portion actually paid to prove its recovery.
Fourth: Debit Note Statuses
Unused: Not yet allocated to an invoice. However, the accounting entry is automatically created immediately upon creating and approving the debit note, and it reflects on the supplier statement and adjusts inventory regardless of allocation status. Allocation is to link the debit note to its purchase invoice so its status changes to ‘Paid’ and doesn’t remain pending, and to easily identify the debit note associated with each invoice.
Partially Used: Part of it has been allocated, and the remaining balance is available for allocation to other invoices.
Used: The full amount has been used.
Draft: If the debit note was saved as a draft to be edited later before approval.
Pending Approval: Will appear when a debit note is saved by a user who doesn’t have authority to approve debit notes.
Permissions Required to Create, Delete, Modify, or Approve Debit Notes:
Users are granted permissions to create, delete, modify, or approve debit notes by going to Settings, then Users, then selecting ‘Manage Roles’ from the top options, then clicking Edit next to the desired role and enabling ‘Create / Modify / Delete / Approve’ options for debit notes.
Fifth: Accounting and Inventory Impact
Accounting Entry: Automatically created when the debit note is created, reflecting inventory movement, tax, and supplier account. It can be viewed from: Reports ← Journal.
Inventory: Returned quantities are automatically reflected in inventory upon debit note creation.
Bank/Cash Account: Affected only after clicking ‘Refund’, not upon mere creation of the debit note.
Sixth: Deleting the Debit Note or Invoice
Delete Debit Note: The debit note can be deleted in all cases through the delete icon next to it in the debit notes list.
Delete Purchase Invoice: If the invoice is approved, it can be deleted directly. If it is linked to a debit note or receipt, the delete icon will not appear. You must first delete the associated debit note or receipt, then the delete icon will appear and you can delete the invoice. When the invoice is deleted, its associated accounting entry is automatically deleted.
Important Note:
– The debit note does not have a QR Code because it is not part of the electronic invoicing documents that require QR.
– Upon creating the debit note, a ‘Returned’ status will be added next to the purchase invoice that was added in the original purchase invoice field during debit note creation. After allocating the debit note or refunding the money, the invoice status changes from ‘Approved’ to ‘Paid’ or ‘Partially Paid’ next to the ‘Returned’ status. The number of the debit note or receipt associated with the invoice will appear below the invoice total when clicking View next to the invoice. If it does not appear, it means the debit note has not been allocated to the invoice or the money has not been refunded.
– If there is an error in the purchase invoice data, and the quantity in it has already been sold, you will not be able to return the purchase invoice directly because the quantity is no longer available in inventory.
Solution:
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First, add a new purchase invoice with the correct data or quantity.
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After that, the quantity will be available in inventory.
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Then you can return the old purchase invoice that contains the error.
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Training Course
For more details, watch the training course that explains how to return invoices: Training Course Link
https://www.youtube.com/watch?v=nXOtPVU1QZU
Keywords for Inquiry
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Purchase Returns
