The word “debtor” comes from Latin, which refers to someone who has debts. The Latin verb “debere” means “to owe”. The word found its way into German via Italian (“debitore”).
Definition of Debtor
Debtor is a term used in accounting and finance. It refers to customers who have received goods or services on credit and therefore still owe a payment. These receivables are recorded as “trade receivables” in the balance sheet. In this respect, someone is a debtor after an online purchase until they have received the goods and paid the invoice.
Accounts receivable accounting plays a central role in companies in order to effectively manage financial relationships with these customers. This involves not only recording and monitoring receivables, but also ensuring the company’s liquidity.
Debtor accounting: the key to securing company liquidity
Accounts receivable accounting is a central component of accounting and deals with the management and monitoring of a company’s receivables from its customers. The main tasks include
- Recording and posting outgoing invoices,
- monitoring of incoming payments and the
- dunning in the event of late payment.
Efficient accounts receivable management therefore makes a significant contribution to ensuring a company’s liquidity by optimizing cash flow and minimizing payment defaults.
Difference to accounts creditor accounting
While accounts deptor accounting focuses on receivables from customers, accounts creditor accounting deals with a company’s liabilities to its suppliers. Both areas are closely linked and play an important role in financial management. Debtor accounting ensures that all income is correctly recorded and monitored, while creditor accounting ensures that all expenses are correctly recorded and paid. A sophisticated solution for processing incoming invoices is essential here. It is important that this solution is also able to receive and process electronic invoices. It should be noted at this point that a well-coordinated interaction between the two accounting areas is crucial for the financial stability and transparency of a company.
The debtor is a customer who receives goods on credit. He therefore still owes a payment. These receivables are recorded in the balance sheet.