2 min read
Definition
An unsecured creditor is owed money but holds no charge over company assets. In the priority of payments it ranks behind secured and preferential creditors, so recovery is often small.
In plain terms
Most suppliers extending trade credit are unsecured. If a customer fails, they queue behind the banks.
Why it matters for your company
Strong credit control, credit limits and credit insurance are how unsecured suppliers manage this exposure. See bad debt.
Related reading
Secured creditor
A secured creditor holds a charge over specific assets, so it ranks near the front of the payment queue and…
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Priority of payments
Priority of payments is the strict legal order in which an insolvent company's money is paid out — secured…
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Credit insurance
Credit insurance pays out if a customer goes bust or defaults, protecting your receivables — turning bad debt…
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Bad debt
Bad debt is money owed to your business that you no longer expect to collect — an invoice or loan that has…
Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.