When to Issue a Credit Note vs a Debit Note: 6 Worked Export Examples

Issue a credit note when the buyer should pay less than the original invoice says; issue a debit note when they should pay more. Both are issued against a specific invoice, quote its number and date, and state the reason and the amount. The definitions are covered in our credit note and debit note guide. This post is about the judgement call: six situations exporters actually run into, and which note each one needs.

Example 1: Short shipment

You invoiced 500 cartons at USD 20, but only 480 fit in the container. The buyer will receive 20 fewer cartons than billed. Credit note for 20 × USD 20 = USD 400, referencing the commercial invoice. Better still, if the invoice hasn't been presented yet, correct the invoice and packing list before shipment so the documents match the cargo.

Example 2: Goods damaged or rejected on arrival

The buyer reports 15 damaged cartons and you agree to compensate rather than replace them. Credit note for the agreed value of the damaged goods. If the damage is covered by cargo insurance, the credit note settles with the buyer; the insurance claim is a separate matter between you (or the buyer) and the insurer, depending on the Incoterm.

Example 3: Discount agreed after invoicing

After the invoice went out, you agree to a 3% volume discount for the quarter. Credit note for 3% of the invoice value, citing the agreement. Don't re-issue the original invoice with a new price once it's been used for customs or bank presentation — the credit note keeps the paper trail clean.

Example 4: Extra freight or handling agreed later

You shipped CFR, and the buyer later asks for an extra fumigation certificate and palletisation you agreed to charge for. Debit note for the additional charges, referencing the invoice and describing each charge.

Example 5: Price error that undercharged the buyer

The invoice used last year's rate of USD 18.50 instead of the agreed USD 19.20 on 1,000 units. Debit note for 1,000 × USD 0.70 = USD 700. Send it quickly, with the contract or proforma that shows the agreed price.

Example 6: Price error that overcharged the buyer

The mirror image: the invoice shows USD 19.20 but the agreed price was USD 18.50. Credit note for the difference. Buyers notice overcharges faster than undercharges, so this one usually arrives as a complaint first.

Quick decision rule

• Buyer owes less than invoiced (short shipment, damage, discount, overcharge) → credit note.
• Buyer owes more than invoiced (extra charges, undercharge, extra units) → debit note.
• Documents not yet presented to customs or the bank → consider correcting the invoice instead.

What every note must reference

• Its own number and date
• The original invoice number and date
• The reason for the adjustment
• The lines or amount affected, in the invoice currency

For Indian exporters, credit and debit notes are also reported in GST returns for the period, and a material adjustment can change the realised value your bank ties to the e-BRC. Tell your accountant and bank when the adjustment is significant.

How Bilexor handles it

In Bilexor a credit or debit note is created against the invoice it adjusts, so the buyer, currency and invoice reference come from that invoice and the customer's balance updates when you issue it.

Frequently Asked Questions

Is a short shipment a credit note or a debit note?

A credit note, because the buyer receives fewer goods than invoiced and should pay less. If the documents haven't been presented yet, correcting the invoice and packing list is usually cleaner.

Who issues a debit note in export trade?

Usually the seller, to charge an additional amount. A buyer sometimes issues a debit note to the seller to claim a reduction, which works like a request for a credit note.

Can I just edit the original invoice instead?

Only before it has been used for customs filing, bank presentation or your tax return. After that, issue a credit or debit note so every document stays traceable.