Understanding debtors and creditors, two seemingly simple concepts that are easy to remember, is one of the more difficult conundrums that accounting can throw up from time to time.
So, we’ve called on the help of one of our accountants in London, to help you navigate these terms once and for all and answer the questions, “What is a creditor?”, and “What is a debtor?”
What is a creditor?
Simply put, a creditor is an individual, business, or any other entity that is owed money because they have provided a service or good, or loaned money to another entity.
As a business owner, there are two types of creditors you’re likely to be dealing with on a regular basis - (i) loans and (ii) trade creditors.
What is a debtor?
A debtor is an individual, business, or any other entity that owes money to another entity because they have been provided with a service or good, or borrowed money from an institution.
There are two types of debtors to be aware of as a business owner - (i) staff loans and (ii) trade debtors.
At Accotax, we pride ourselves on being a London chartered accountant that cuts out all the jargon and speaks your language. This ensures that you understand the mechanics of your finances, thus enabling efficiency and stability while you grow your business.
If you need advice or services on any aspects of accounting, tax, business management or specific problems with debtors or creditors, our specialist team are ready to help. Please get in touch with us, or try our instant accounting quote tool and get a competitive fee in just 5 clicks.
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