Debtor

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Who or what is a debtor?

The term debtor is derived from Latin and literally means “debtor”. Thus, debtor is another term for a debtor from delivery and/or services. In practice, it is often the customers of a company who buy goods on account or use services for which they have not yet paid. However, a company or a legal entity under public law can also be a debtor.

The counterpart to the customer is the creditor. The latter has an outstanding receivable from the former for which he has already rendered the service.

The term debtor can also be found in accounting. The so-called accounts receivable accounting is a sub-branch of financial accounting and deals with the receivables of a company. The tasks of accounts receivable include monitoring all incoming payments, dunning, checking the creditworthiness of debtors, and posting and monitoring credit notes or receivables. 

For any company, having an accurate overview of its accounts receivable is important. This is because it shows who still owes the company money and how much. A sensible and well-organized accounts receivable management is therefore of great value.