A creditor is a natural or legal person who supplies goods or services to a company on a credit basis. This means that the company does not pay for the goods delivered or services rendered immediately, but incurs a liability to the creditor which is settled at a later date.
Creditors are therefore also referred to as creditors in accounting, as they are entitled to payment from the company. These liabilities are shown on the company's balance sheet as current or non-current liabilities, depending on the agreed payment term. The management of creditors is crucial for a company's liquidity and financial stability. A creditor is someone who places trust in another by supplying goods or services on a credit basis, i.
The term thus reflects the trust that the supplier or service provider places in the buyer that the latter will settle his debt at a later date. In business and finance, the creditor is therefore a central figure who ensures the financing and smooth flow of goods and services between companies.
Common creditors are suppliers and service providers who provide goods or services to a company on a credit basis. Here are some examples of typical creditors in different industries:. These creditors are critical to a company's business operations as they provide the necessary resources and services required for production, distribution and operations. The efficient management of creditors is therefore essential to ensure financial stability and continuity in business operations.
This table provides a clear and concise presentation of the differences between debtors and creditors, including their definitions, balance sheet items, posting accounts, payment flows and their respective importance in the company context. The accounts payable target refers to the period of time that a company has agreed with its suppliers or service providers within which invoices for goods delivered or services rendered must be paid.
