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A debtor or debitor is a legal entity (legal person) that owes a debt to another entity. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor. When the counterpart of this debt arrangement is a bank, the debtor is more often referred to as a borrower.
In finance, bad debt, occasionally called uncollectible accounts expense, is a monetary amount owed to a creditor that is unlikely to be paid and for which the creditor is not willing to take action to collect for various reasons, often due to the debtor not having the money to pay, for example due to a company going into liquidation or insolvency.
A ledger [a] is a book or collection of accounts in which accounting transactions are recorded. Each account has: an opening or brought-forward balance; a list of transactions, each recorded as either a debit or credit in separate columns (usually with a counter-entry on another page) and an ending or closing, or carry-forward, balance.
Debtor finance is a process to fund a business using its accounts receivable ledger as collateral. [1] Generally, companies that have low working capital reserves can get into cash flow problems because invoices are paid on net 30 terms.
A Company Voluntary Arrangement (CVA) is a legal agreement between the company and its creditors, based on paying a fixed amount lower than the outstanding actual debt. These are normally based on a monthly payment, and at the end of the agreed term the remaining debt is written-off.
The terms equity [for profit enterprise] or net assets [not-for-profit enterprise] represent the residual interest in the assets of an entity that remains after deducting its liabilities (CF E61). Equity accounts include common stock, paid-in capital, and retained earnings. Equity accounts can vary depending where an entity is domiciled as some ...
In accounting the term debtor collection period indicates the average time taken to collect trade debts. In other words, a reducing period of time is an indicator of increasing efficiency. It enables the enterprise to compare the real collection period with the granted/theoretical credit period.
Commercial debt is generally subject to contractual terms regarding the amount and timing of repayments of principal and interest. [1] Loans, bonds, notes, and mortgages are all types of debt. In financial accounting, debt is a type of financial transaction, as distinct from equity.