What is a Creditor

A creditor is an entity, a company or a person of a legal nature that has provided goods, services, or a monetary loan to a debtor

 

Once a creditor has given a loan, the payment is expected at a later date, typically agreed upon beforehand. Usually, each creditor has a specific agreement with their debtors about the terms of payment, discount offerings, etc.

 

 

 Examples of creditors:

 

 * Trade creditors – money you owe to suppliers

 

* Loan from a bank or an entity

 

What is a debtor?

 

A debtor is the opposite of a creditor – it refers to the person or entity who owes money to an organisation or person.

 

For example, a debtor is somebody who has taken out a loan at a bank for a new car.

 

* Examples of debtors:

 

* Trade debtors – money owed from customers

 

* Staff loans

 

Difference between debtor and creditor with examples

 

Assume that a company borrows money from its bank. The company is the debtor and the bank is the creditor. If a manufacturer sells merchandise to a retailer with terms of net 30 days, the manufacturer is the creditor and retailer is the debtor.