What is a debit memo?

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A debit memo (or debit note) is a document used to formally notify a counterparty that an amount has been added to what they owe. It is effectively the opposite of a credit memo — instead of reducing a balance, it increases it.

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Debit memos are used in several contexts: a buyer raises one against a supplier to recover costs for returned goods or overcharges; a seller raises one against a customer to capture charges that were omitted from the original invoice; or an internal debit memo is used to record intercompany charges between business units.

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Common use cases

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In procurement and AP: if a business receives goods in poor condition and incurs costs for disposal or rework, it may raise a debit memo against the supplier to recover those costs. The debit memo reduces the outstanding AP balance or creates a receivable from the supplier.

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In sales and AR: if additional charges apply after an invoice has been issued — a freight surcharge, a fuel adjustment, a price correction — a debit memo is raised to capture those amounts. From the customer's perspective, it increases their payable.

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Why it matters for reconciliation

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Unmatched debit memos are a common source of reconciliation breaks. If a debit memo is raised in one system but not reflected in the counterparty's records — which happens frequently in intercompany reconciliation — the two sides will not agree at close. Automated matching systems that can identify and apply debit memos against the correct open items significantly reduce this problem.

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Related: Credit Memo · Intercompany Reconciliation · Vendor Reconciliation · Accounts Payable (AP)