On the company's balance sheet, the company's debtors are recorded as assets while the company's creditors are recorded as liabilities.
Note that every business entity can be both debtor and creditor at the same time.
Understanding the difference between debtors and creditors
Creditors are individuals/businesses that have lent funds to another company and are therefore owed money.
By contrast, debtors are individuals/companies that have borrowed funds from a business and therefore owe money.
The primary difference lies in their positions: a debtor owes money and carries a liability on their balance sheet, while a creditor is owed money and holds an asset on their balance sheet.
This contrast defines their financial roles and relationships.
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