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 March 23rd, 2016 by Team

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