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How to create a debit note for a supplier in Billing

Raise a debit note when you return goods to a supplier or the supplier billed the wrong price, and post it to Smart Books.

Level: intermediate · Updated 30 Oct 2026

Before you start

A debit note is the document you raise when you need to tell a supplier that you owe them less. You might send goods back, or the supplier might have charged the wrong price. This article walks you through creating one in Billing.

When to use a debit note

  • Goods went back to the supplier.
  • The supplier billed the wrong price.
  • A discount was agreed after the bill.
  • Goods arrived short or damaged.
  • There is a post-purchase charge you are claiming back.

Before you start

You need a Billing profile that allows making debit notes. If you do not have one, the page shows You cannot raise a debit note. Ask whoever looks after access for your company to change it under Settings.

Create the debit note

  1. Open Purchases and choose Debit note. The page is called Create debit note.
  2. In Supplier & Document Details, choose the Supplier.
  3. Check the Debit Note No. and the Date.
  4. Under Against Document, select the bill or purchase order this note relates to, so the two can be matched later. Bills are listed once you have chosen the supplier.
  5. If the supplier has its own reference or you have a return challan, type it in Reference No. (optional).
  6. Choose a Reason: Goods sent back to the supplier, Supplier billed the wrong price, Short delivery, Damaged on arrival, or Something else. The reason is required, is shown on the note and is kept with it.
  7. Choose the type of note, described below.
  8. Add the items or the amount.
  9. Select Save & post.

Choose the type of note

  • Goods being returned: the items go back to the supplier, and the stock goes with them. Billing tells Inventory, which reduces the stock.
  • Value adjustment only: the price was wrong or a discount was agreed. Nothing is returned to stock.

Add the items or the amount

For goods being returned, use Add from bill to bring in the lines of the bill you chose, or select Add item. For each line you can set the quantity, the rate, a discount percentage and the tax. The unit comes from the item in Inventory. Use the remove button on a line to take it off. To add another line, select Add another item. For a value adjustment, type the Amount to adjust instead.

The Summary card shows your total before tax. Smart Books works out the GST when the note is posted.

Post the note

When you select Save & post, a window asks Post this debit note? It shows the amount before tax and, when available, the total with GST. It also warns that the note goes to Smart Books now and cannot be edited afterwards. Select the post button to continue, or Go back to change something. If some details are still needed, they are marked on the page and nothing is posted.

Other ways to save

  • Select Save as draft to keep your work in this browser. The draft is not on the server and nobody else can see it. Nothing is sent to Smart Books until you post.
  • Open the small menu beside Save & post and choose Save, post & start another to post this note and get a fresh one for the same supplier.

Related articles

Steps

  1. Open Purchases and choose Debit note.
  2. In Supplier & Document Details, choose the Supplier.
  3. Under Against Document, select the bill or purchase order this note relates to.
  4. Choose a Reason from the list. It is required.
  5. Select Goods being returned or Value adjustment only.
  6. Add the items, or type the Amount to adjust.
  7. Select Save & post, then confirm in the window that opens.

Troubleshooting

Still stuck? Contact support or ask in the community.