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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.
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.
Receivable turnover ratio or debtor's turnover ratio is an accounting measure used to measure how effective a company is in extending credit as well as collecting debts. The receivables turnover ratio is an activity ratio, measuring how efficiently a firm uses its assets .
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.
The creditor's rights against the debtor and the lessor's rights against the lessee are based on the credit documents and the lease, respectively, and not the financing statement. Pursuant to the standards set forth in the UCC, at 9-503 and 9–504, the financing statement need only contain three pieces of information: the debtor's name and address
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.
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Debt settlement (also called debt reduction, debt negotiation or debt resolution) is a settlement negotiated with a debtor's unsecured creditor. Commonly, creditors agree to forgive a large part of the debt: perhaps around half, though results can vary widely. When settlements are finalized, the terms are put in writing.