They are two important terms often used in business circles. In many cases the interest charged is based on monthly basis. Creditor and Debtor are two terms that have to be understood with difference. A creditor is a person who lends money and hence is a person to whom a debt owes. This is the major difference between a creditor and a debtor. The distinction also results in a difference in financial reporting. A debtor is a person on the other hand who has to repay the debt that he owes to a creditor. Let us discuss some of the major differences between Creditor vs Debtor. Terms of Use and Privacy Policy: Legal. The debtor is liable to pay more interest in case of default. For a business, the amount to be paid may arise due to repayment of a loan, goods purchased on credit, etc.
Similarly, you are in debt to your suppliers if they have provided you with goods which you are yet to pay for in full. This is the major difference between a creditor and a debtor. Debtors are people/entities who owe a sum of money to the company. On the company’s balance sheet, the company’s debtors are recorded as assets …
The interest that he pays to the creditor depends upon the agreement made between him and the creditor. Examples of a Debtor and a Creditor.
On the other hand a debtor too can take a creditor to court in the case of heavy interest charged by him. Creditors are those who extend the loan or credit to a person, and it may be a person, organization, or firm.
On the other hand a debtor pays interest to the creditor for the credit for money or goods that he enjoys for a period of time. It is interesting to note that the word creditor is derived from the Latin word ‘creditor’. The term creditor also refers to a person or a company that gives credit for money or goods. This is a major difference between a creditor and a debtor. The company is the debtor and the bank is the creditor. Creditors are people/entities to whom the company has an obligation to pay a certain sum of money. The key difference between a debtor vs. creditor is that both concepts denote two counterparties in a lending arrangement. All rights reserved. Debtors and creditors in a small business. Understand the difference between debits vs. credits with this guide from The Blueprint, which also provides multiple examples and a handy reference chart. Compare the Difference Between Similar Terms. The creditor can take the debtor to court in case of default in payment or in the event of dishonoring of checks issued to him by the debtor. If a manufacturer sells merchandise to a retailer with terms of net 30 days, the manufacturer is the creditor and retailer is the debtor. The following are the major differences between sundry debtors and sundry creditors: Debtors are the parties who owed a sum of money towards the entity. A creditor is an entity or person that lends money or extends credit to another party. The amount of interest depends on the agreement between the creditor and the debtor. A creditor is a person who lends money and hence is a person to whom a debt owes. The party to whom the credit has been granted is the debtor. Difference Between Cash Flow and Net Income, Difference Between Credit Note and Debit Note, Difference Between Coronavirus and Cold Symptoms, Difference Between Coronavirus and Influenza, Difference Between Coronavirus and Covid 19, Difference Between Marilyn Monroe and Elizabeth Taylor, Difference Between Genetic Engineering and Biotechnology, Difference Between Cyber Crime and Computer Forensics, Difference Between Amorphous Urate and Phosphate, Difference Between Polarizable and Non Polarizable Electrode, Difference Between Localized and Delocalized Electrons, Difference Between Ubiquitination and SUMOylation, Difference Between Co and Post Translational Modification, Difference Between Van der Waals and Hydrophobic Interactions. In this example, Unreal corp. is a debtor for X. These are the differences between a creditor and a debtor. As a matter of fact a creditor charges some sort of interest for the credit for money or goods that he gives. Creditors – In day to day business a person or a legal body to whom money is owed is known as a creditor. Creditors are an Account Payable and reside under current liabilities in the Balance Sheet. Customers who do not pay for products or services up front, for example, are debtors to your business, which serves as the creditor in this scenario. Filed Under: Accounting Tagged With: borrow, borrower, Credit, Creditor, debt, Debtor, lend, lender, Professor in Social Science and a contributing writer for Difference Between. Assume that a company borrows money from its bank. A debtor is a person on the other hand who has to repay the debt that he owes to a creditor. @media (max-width: 1171px) { .sidead300 { margin-left: -20px; } } The term creditor also refers to a person or a company that gives credit for money or goods. A debtor is an entity or person that owes money to another party. Creditors are the parties, to whom the company owes an obligation. (adsbygoogle = window.adsbygoogle || []).push({}); Copyright © 2010-2018 Difference Between. Debtors come under the category of account receivable whereas Creditors come under the category of account payable. A debtor and a creditor are two important persons involved in the making of any business for that matter. In contrast, a debtor is a one who takes the loan and, in return, has to pay back the amount of money within a stipulated period with or without interest. Thus, there is a creditor and a debtor in every lending arrangement. They have different meanings and connotations.
Debtors are an Account Receivable and reside under current assets in …