Creditors (often called suppliers) are the companies or individuals that provide goods and services to your business.
- When they give you those goods/services on credit (i.e., you pay later), you owe them money.
- That makes you the debtor in this relationship.
The Relationship in Simple Terms
- Supplier (Creditor): Gives you the goods or services now.
- You (Debtor): Promise to pay them later, usually under agreed payment terms.
Accounting View
- On your books:
- Creditors/Suppliers = Accounts Payable (a liability).
- On their books:
- You = Debtor/Customer (an asset).