Debtors vs. Creditors
Debtors and Creditors Definitions
What are Debtors?
The debtors are the companies, individuals or the retailers who take goods or other services from the creditor on credit. The contract and official signing also take place between both of them, and it is also noted that when the debtor will be returning the amount. The debtor also incurs the interest rate; and in the case of non-payment within the time, the interest ratio gets higher. Those debtors who have good market repute and have a good record of returning the credit on time are appreciated and are being offered the best services possible. The business person or the firm turns out to be the debtor after they didn’t have a huge amount of money to run different operations, and to make sure the availability of all sorts of products. Debtors also deal the matter by the demand priority; following it the products or the goods which have higher sale or demand among the customer are bought on credit at first. The move is initiated so that the high sale demand goods get sale sooner and it makes the process of credit return quite convenient to them. The word ‘debtor’ is derived from a Latin word ‘debere,’ which means ‘to owe.’ If the debtor gets insolvent due to any of the untoward incident then the minimum amount from is taken and that too in different intervals of time.
What are Creditors?
The creditor is the solid firm, individual or the wholesaler who avails the product on credit to the debtors. It should be kept mentioned that the creditor possesses huge capital or holds the strong relation with the different multinational companies. With utilizing his money rightly, the creditor provides the wide array of goods to the debtor on credit. A certain interest rate is also imposed by the creditor which is directly affiliated with the time specified for the return of the credit. The creditor also offers the debtors which return the money within the rapid time the cash discounts. When the term and conditions are fixed between both the parties, the creditor in details tells about the cash discounts and payment schedules. The creditor sometimes provides the credit facility with just seeing the market repute of the firm, and in some cases, they make sure the asset of the debtors are pledged as the security.