Table of contents13 sections
- Accounting note and debit note — what they are, when to issue them and how they differ from an invoice?
- What is an accounting note?
- When can a debit note be issued?
- When should an invoice be issued instead of a note?
- Accounting note vs VAT invoice
- What should an accounting note contain?
- Does the business partner have to accept the note?
- Is a debit note sent to KSeF?
- Example of a debit note
- The most common mistakes
- How does Administy help issue accounting notes?
- Summary
- Important information
Accounting note and debit note — what they are, when to issue them and how they differ from an invoice?
A company may need to charge a business partner an amount that is not payment for a service performed. It may be a contractual penalty, interest for late payment, compensation for the costs of recovering receivables, or a specific damages claim.
In such cases the right document may be an accounting note, often called a debit note. However, it cannot be used instead of an invoice merely to avoid charging VAT. The type of document is determined by the nature of the receivable.
A company may need to charge a business partner an amount that is not payment for a service performed. In that case the right document may be an accounting note — but not always.
What is an accounting note?
An accounting note documents a business transaction that is not confirmed with a VAT invoice. It most often concerns receivables that are not payment for the supply of goods or the performance of a service.
A debit note is a type of accounting note that informs the business partner of an additional amount to be paid. The note itself, however, does not create an obligation. The basis of the receivable should be a contract, a legal provision or another documented event.
When can a debit note be issued?
A note can be used when the receivable is not remuneration for a performance. The most common examples are:
Contractual penalty
A contractual penalty may apply to non-performance or improper performance of a non-monetary obligation, for example:
- breach of confidentiality
- missing the deadline for completing the work
- breach of a non-compete clause
- failure to deliver the agreed scope
- failure to meet SLA parameters
A contractual penalty is not used in place of interest for late payment of an invoice.
Interest for late payment
If the client has not paid on time, the note can document the interest charged. It should then state the invoice, the payment due date, the period of delay, the rate applied and the amount of interest.
Compensation for recovering receivables
In commercial transactions the creditor may be entitled to compensation equal to the equivalent of:
- 40 euros for a receivable of up to 5,000 PLN
- 70 euros for a receivable above 5,000 PLN and below 50,000 PLN
- 100 euros for a receivable of at least 50,000 PLN
Before issuing a note, check whether the relationship meets the conditions of a commercial transaction and whether the right to charge compensation has arisen.
Damages
A note can document damages if the payment is compensation for a loss suffered, rather than payment for a performance rendered for the business partner.
When should an invoice be issued instead of a note?
A note should not be used when the additional amount is in fact remuneration for:
- additional work
- expansion of the project scope
- additional team hours
- granting a licence
- extending a subscription
- consent to a change in the terms of cooperation
- any other performance rendered for the client
The key question is:
If the business partner receives a specific service or benefit in return, the right document may be an invoice. The name “debit note” alone does not mean that the receivable falls outside VAT.
Accounting note vs VAT invoice
An invoice documents the sale of goods or a service. An accounting note, on the other hand, concerns a settlement that is not a transaction subject to VAT.
That is why a debit note, as a rule:
- does not include a VAT rate
- does not show a tax amount
- does not give the recipient the right to deduct VAT
- does not replace an invoice for goods or a service
- is not used to change the price of a service already performed
What should an accounting note contain?
A note should contain, above all:
- the name and number of the document
- the issue date
- the details of both parties
- a description of the business event
- the basis for charging the receivable
- the amount to be paid
- the date of the event
- the payment due date
- the bank account number
- a reference to the contract, invoice or other source document
For a contractual penalty, it is worth citing the specific clause of the contract. For interest, give the invoice number, the payment due date, the number of days of delay and the way the amount was calculated.
Does the business partner have to accept the note?
Issuing a note does not automatically mean that the business partner acknowledges the charge.
A note documents a claim, but does not replace its basis. That is why it is worth attaching or citing:
- the relevant provision of the contract
- the interest calculation
- a copy of the unpaid invoice
- a protocol confirming the breach
- correspondence or other evidence
If the business partner disputes the validity of the charge, the matter may require clarification or further pursuit of the claim.
Is a debit note sent to KSeF?
No. Debit notes and credit notes are not sent to the National e-Invoice System (KSeF). They can still be issued and delivered outside KSeF, for example as a PDF document.
An accounting note should not be confused with a correction note, which was used to correct selected data on an invoice.
Example of a debit note
A software house concluded a contract with a subcontractor providing for a penalty of 2,000 PLN for breach of confidentiality.
Once the breach is documented, the company can issue a debit note containing:
- the details of both parties
- a description of the event
- a reference to the relevant clause of the contract
- the amount of 2,000 PLN
- the payment due date
- the bank account number
If the charge is of a sanction nature and is not payment for a service, the note as a rule does not include VAT. Each case should, however, be assessed on the basis of the contract and the actual course of events.
The most common mistakes
The most common problems are:
- replacing an invoice with a note for additional work
- no legal or contractual basis for the charge
- charging a contractual penalty for late payment
- no calculation of the receivable
- treating every note as a document that automatically falls outside VAT
Taxation is determined not by the name of the document, but by the real nature of the payment.
How does Administy help issue accounting notes?
Administy makes it possible to issue accounting notes as part of the receivables management and automated collections process.
The business partner’s and the invoice’s details are already available in the system, so the company does not have to create the document in a separate programme or retype information by hand.
Administy helps you:
- monitor payment delays
- issue an accounting note
- link it to the business partner and the receivable
- keep track of its payment due date
- connect the document to the further collections process
- organise the history of communication and actions
A note can document, among other things, interest, compensation for the costs of recovering receivables or another justified charge.
Administy does not decide whether a given receivable is subject to VAT. It does, however, make it easier to issue the document and to handle the whole process in one place.
Summary
An accounting note can be used to document contractual penalties, interest, compensation and certain damages. It should not, however, replace an invoice for additional services or an expansion of the scope of cooperation.
Administy makes it possible to issue an accounting note and link it to the receivables recovery process. Thanks to this, documents, payment due dates and further collections actions can be handled in one system.
Important information
This article is for information purposes and does not constitute legal or tax advice. Before issuing a note, it is worth verifying the nature of the receivable and the provisions of the contract with an accountant, a tax adviser or a lawyer.
Important: this article is for information purposes and does not constitute legal or tax advice. Before issuing a note, it is worth verifying the nature of the receivable and the provisions of the contract with an accountant, a tax adviser or a lawyer.
