What Is the Purpose of a Debit Memo?

A debit memo is meant to notify the account holder about funds that have been withdrawn to satisfy bank charges or bounced check fees, according to Investopedia. A business can send a debit memo to another company in order to make adjustments to transactions, as well.

Investopedia notes that debit memo is short for a debit memorandum. Debit memos are sent to bank customers along with their monthly statements. Customer cash withdrawals and check debits are not included in debit memos. These memos are undesired statements among customers because of the additional fees involved.

Investopedia mentions that debit memos can occur when a dispute arises between two companies. If a business is unsatisfied with a service or product, it can send a debit memo to the other company to adjust credits and debits. Debit memos are a burden to businesses because they address additional charges which negatively impact companies costs in labor and reputation.