A debtor is an individual or entity that owes money to a business. This typically includes customers who have received goods or services but have not yet paid for them, also known as trade debtors. Other examples of debtors include amounts owed from deposits or prepayments. Effective management of debtors is crucial for maintaining healthy cash flow and financial stability.
Types of Debtors:
Advance payments made for services like training or events.
Trade Debtors: Customers who owe money for goods or services provided on credit.
Non-Trade Debtors: Individuals or entities owing money for reasons other than sales, such as:
Rent deposits held by landlords.