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The Finance Book by Si Hussain, Stuart Warner

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12 Debtors and creditors

‘Creditors have better memories than debtors; creditors are a superstitious sect, great observers of set days and times.’

Benjamin Franklin, scientist, inventor, author and American politician

In a nutshell

Credit is one of the cornerstones of modern business. The majority of companies offer and receive credit.

Customers who receive credit are known as debtors (or receivables). Suppliers who offer credit are known as creditors (or payables).

Debtors are assets as they will be a future cash inflow or ‘benefit’. Creditors are liabilities as they will be a future cash outflow or cost.

Need to know

Why is this important?

Debtors are an important source of future cash inflows. They enable a business to predict with ...

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