2 min read
Definition
A trade debtor is a customer who owes a business money for goods or services supplied on credit. The total of all trade debtors is your accounts receivable — the cash tied up in unpaid customer invoices.
In plain terms
When you invoice a customer on 30-day terms, they become a trade debtor until they pay. A ledger full of trade debtors is a ledger full of cash you have earned but not yet collected.
Why it matters
Managing trade debtors — through credit control and prompt collection — keeps cash flowing. See aged debtors and trade creditor.
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