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May I ask about the DEBIT NOTE and CREDIT NOTE?
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TRACKING NO. 20260125 / GLOBAL Zhongshen Trade · 23+ Years of Expert Trade Agency
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We recently received a Debit Note from a foreign supplier demanding additional payment, which wasn't mentioned in the previous contract. At the same time, we've also received a Credit Note before. Could you please explain what these two documents mean? What are the potential risks in international trade? How should we handle this situation?
Kevin LinYears of service：4Customer Rating：5.0
Trade Solutions ManagerStart a Chat
The Debit Note and Credit Note you received are payment adjustment documents in international trade，but there is a critical risk here: they directly affect the customs declaration value. According to the WTO Valuation Agreement，any adjustments that result in changes to the actual payment price must be declared at customs. If the Debit Note involves additional costs (such as freight，insurance，commissions，etc.) that were not reflected in the original customs declaration，this may constitute an under-declaration，leading to tax supplementation，fines，or even smuggling risks. Similarly，if the Credit Note is used as a price discount but not declared to customs，it may be deemed as a false declaration。
Suggestions。
1) Immediately check the original customs declaration to see if the relevant costs have been included。
2) Retain all emails and contract amendments as evidence。
3) For single transactions exceeding $5,000 or annual cumulative adjustments exceeding 10% of the total value，it is recommended to proactively file a supplementary declaration with customs to avoid being deemed as intentional under-declaration。
Especially for transactions involving related companies，customs will conduct stricter reviews of Debit/Credit Notes，so it is essential to ensure that pricing policy documents are complete。
Lucas LiuYears of service：8Customer Rating：5.0
Senior Operations ConsultantStart a Chat
From the perspective of logistics operations, Debit Notes and Credit Notes essentially serve as retroactive settlements or offsets for expenses. The most common scenario: After the goods arrive at the port, the actual freight, storage fees, and destination port charges exceed the estimated costs. In this case, the freight forwarder or supplier will issue a Debit Note to collect the additional fees. Conversely, if overcharging occurs, a Credit Note will be issued for refunds. The key point lies in the Incoterms agreement: If the contract is CIF, the supplier bears the freight costs, so you shouldn’t pay the Debit Note they send. However, if the contract is FOB, you must bear the additional costs incurred by the freight forwarder you designated. Practical advice:
1. Don’t rush to pay the Debit Note immediately. First, verify the original quote and the fee details on the bill of lading (B/L).
2. Require the other party to provide supporting documents from third parties (e.g., shipping companies or ports).
3. For Credit Notes, ensure the other party provides a red invoice or an official debit letter. Otherwise, the finance department cannot process the payment.
Remember: These documents must be settled before the next shipment, otherwise it may affect the release of new goods. Especially for Debit Notes incurred at the destination port, delaying payment may result in the goods being detained in the warehouse, leading to demurrage and storage fees that snowball over time.
Michael ZhangYears of service：6Customer Rating：5.0
Customs Declaration & Compliance ExpertStart a Chat
The situation you encountered is quite common, and the key lies in "prior agreements" and "posterior evidence." In business, Debit Notes and Credit Notes are tools for adjusting accounts, but they are easily misused. Here's a high-EQ approach:
1. Reponse promptly: When receiving a Debit Note, first email a reply stating "We have received it and are currently verifying it. We expect to respond within X working days" to give yourself time to prepare.
2. Three-step process:
- Review the contract: Check if there are clauses stating "final fees are based on actual costs." If not, this becomes a negotiating leverage—you can either reject the claim or request cost sharing.
- Require detailed records: Demand specific time/location/third-party proof for the expenses. Refuse to accept vague claims.
- Propose offsetting: If valid but disputed, suggest using a Credit Note or offsetting against future payments to avoid immediate payments affecting cash flow.
- Pressure the other party: For Credit Notes, actively urge prompt issuance and emphasize "Our finance team needs this to clear accounts, otherwise it will delay future payments."
Prevention is better than cure: Add a clause to the contract stating "Any fee adjustments exceeding 5% of the original invoice amount must be confirmed in writing by both parties before taking effect." This controls the risk of arbitrary Debit Notes from the source.
Remember: Maintain a professional yet firm attitude to protect both relationships and interests.