What is a creditor?

A creditor is a party that is still owed payment by another party. Often, this party has sent a sales invoice that has not yet been paid. The party that still has to pay the invoice is the debtor.

Suppose Company A delivers products or services to Party X. After delivery, Company A properly sends an invoice to Party X. From that moment on, Company A is the creditor and Party X is the debtor. Company A has sold products, and these must still be paid for.

Where does the word "creditor" come from?

Someone who is still to be paid by another person or company is called a creditor. The customer of this creditor actually has a debt to the selling party. The English word for "schuldeiser" is creditor. And that is where the word "crediteur" comes from.

Can I be a creditor and a debtor at the same time?

Yes, certainly; in fact, this is the case for virtually all companies. If you purchase products or services, you are the debtor, and if you sell them, you are a creditor. This is not a problem as long as both flows are in balance and you retain sufficient resources to pay your own creditors.

A problem can arise, however, if the payment behavior of your own customers deteriorates. In that case, a situation may arise where there are insufficient resources to pay your own bills. Companies in this situation are in serious trouble.

That is why it is important as a company to keep your accounts receivable management well under control. Send reminders to your customers in a timely manner and hand over your invoices if payment remains outstanding despite all your efforts.

If you engage a collection agency, your invoice will be paid in 92% of cases without the intervention of a judge. This prevents high extra costs, which is ultimately in the interest of both the debtor and the creditor.