Debtor

What is a Debtor?

In general terms, a debtor is a person who owes money.

For a business a debtor normally refers to a customer who owes the business money for goods and services supplied to them on account. As the amount owed is for trade on account, they are often referred to as trade debtors.

In accounting, the term debtor is also used to refer to the actual amount of money owed by the customer. A debtor is an asset (a debit balance) of the business and, if the amount is due within twelve months of the balance sheet date, is shown on the balance sheet under the heading of current assets.

Debtors are often referred to as accounts receivable in financial statements.

Additional information on this subject can be found in our debtors tutorials.

For further information see the Wikipedia debtor definition.

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Last modified April 25th, 2019 by Michael Brown

About the Author

Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years in all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.

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