The difference between debtors and creditors is that the former are debtors and the latter are the entities that provide the debt. Both the creditor and the debtor can only be a person with undisputed civil rights.
When asked who the debtor is, it is important to give a clear definition that this is an entrepreneur or a company with accounts receivable, which can be divided into the following subtypes:
- Sold products, services or work performed of another nature.
- Overpayment for non-budgetary or non-budgetary funds.
- Household or business travel expenses.
- Advance payments.
- Lottery debts.
- Bills of exchange debts.
The debtor, in a more understandable word, is an asset of the company.
The creditor is the person to whom the money is owed. That is, considering the concepts of debtor and creditor, the second is the responsibility of the company. Business practice – acquisition of credit, for a period of at least 30 days. In some cases, this loan can last up to 3-4 months from the invoice date.
Both creditor and debtor must take into account all possible factors, carry out a timely analysis of activities and also try to avoid the formation of overdue debts.
Relations with the debtor: rights and obligations
Debtor and receivable are concepts that imply the debt of an individual or legal entity. If one of the parties fulfills obligations in favor of the other, it is its own creditor.
Accounting for settlements with debtors and creditors provides that the former cannot independently change the terms of the debt contract. Exceptions can only be made in cases where it is already provided for in the Contract or in the Legislation.
The debtor's obligations can be fulfilled before the deadline. The debtor's requirements, under the terms of the legislation in force, may be transferred to third parties. Here it is worth distinguishing between fulfilling obligations and transferring debt. In the second case, the consent of the creditor is required.
For example, if several persons act as debtors, each of them must fulfill his obligations to the same extent.
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What if an account receivable appears?
The bank debtor is a person with whom work requires certain knowledge and skills. To competently build these relationships, you should adhere to the following recommendations:
- It is necessary to analyze the financial well-being of the debtor.
- Go through the calculation procedure, determine the terms and amount of the credit line.
- Organize the flow of documents between structural divisions.
- Establish a procedure for collecting accounts receivable.
Once these factors are identified, it will be possible to build cooperation with the debtor so that there are no problems with debt repayment.
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Classification of receivables
The audit of settlements with debtors and creditors is carried out by employees of specialized companies. If we talk about execution debt obligations, here is the rating will be as follows:
- Normal… The deadline for settlement of the normal debt has not yet arrived.
- Late… Late payment can lead to interruption of production processes. To restore the situation, it is necessary to resort to borrowing funds.
- doubtful… If there is such a debt, the creditor may have doubts that the debtor will pay the debt in full. An indicator of payment uncertainty may be that the debtor begins to hide from bailiffs.
- Hopeless… The debtor's obligations cannot be fully discharged due to the bankruptcy or liquidation of the company. Here, the creditor can try to collect the debtor's assets. But, as practice shows, these attempts are often equated with zero.
Accounting for debtor settlements is an important process that allows a clear understanding of the type of debt that has arisen. Each debtor must take into account the fact that timely repayment of debt is a guarantee of production efficiency, as well as reducing liability risk.
What if the debtor does not pay on time?
When considering who the creditors and debtors are, pay attention to possible reasons for non-payment of the resulting debt:
- Financial difficulties. This factor is the most common in a modern economy. Crisis and other undesirable circumstances make the debtor unable to repay the debt within the specified time frame.
- The presence of financial capacity, but the debtor's lack of desire. The formation of accounts receivable can be justified by a certain strategy. Often, debt default arises from the fact that the debtor is used to living in debt, thus expanding his business.
- Force majeure. This includes natural disasters, natural disasters, as well as the intervention of third parties by the competent authorities.
- Unfair plans. Organizations that need to work with individuals or small customers know firsthand what debtors are, who are essentially wrongdoers. Among small business representatives, you can often find scammers who want to get hold of other people's financial resources.
Debtors and creditors, whose difference is obvious, must initially carry out a confrontation of all possible factors and an in-depth analysis of the counterparty's activity, which will be a guarantee of timely repayment of the debt.
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If necessary, the creditor can go to the Debtor's Office. Representatives of this agency will try to raise money in every possible way. If you talk about possible measures, they can be the following:
- Psychological. Occasionally, the debtor will receive phone calls requesting payment of the debt. Here, one can observe the most different emotional coloring from the tone of the desk clerk.
- Economic. The debtor is subject to financial sanctions, fines, penalties and so on.
- Legal. Most of the time, this is a lawsuit. But, before that, the corresponding legal correspondence will certainly be carried out.
If, however, the listed methods brought the expected result and the debtor partially or fully repaid the debt, the creditor will still exclude that counterparty from the list of possible partners.
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