How to Make a Debit Note

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Sometimes transactions are made between people who do not have a mechanism for formal billing. Some examples would be if you agree to sell an antique or piece of furniture in your possession to a buyer; if you provide a service that is not your main source of income for an agreed-on price; or if you loan someone a sum of money. Often a handshake seals these agreements. However, at some point you will want to make a debit note that acknowledges your agreement.

Decide what medium you will use to make your debit note. Even a handwritten note will do for a debit note, and email debit notes are recognized as acceptable ways to acknowledge that a debt is owed. You may also want to type a debit note to make sure that illegible handwriting will not lead to confusion.

Give all the information necessary for the receiver to pay. An effective debit note will describe the service or item that has been purchased, the date the transaction was completed, and the address of the person to be paid.

Send or deliver the debit note to the appropriate person. The best way is to draft the note as soon as the transaction is complete. A debit note is not a contract--that is, it is not the agreement itself. Think of it as an informal invoice to remind the purchaser that payment is due.

Remind the purchaser again within about 10 days of the first debit note.

Change the tone of the note to reflect time elapsed. For instance, what began as a friendly agreement may take on a more formal tone as the agreed-on payment becomes overdue.

Tips & Warnings

  • When a supplier of goods or services has an invoice billing procedure, debit notes are sometimes used in addition. For instance,when you get a bill from your doctor's office that acknowledges a certain amount has been billed to your insurance company, this is a debit note--a less formal reminder than an invoice that money is due. It should have all the information that an invoice would have, just presented in a less formal way.
  • If your debit note does not result in payment, you will have to decide whether to keep sending reminders or going to a debt collector or attorney. Remember that the law protects informal transactions as well as more formal ones, but be sure both parties have a complete understanding of the agreement before any transaction is made.

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