creditors

Creditor

A person or company to whom one owes money. A creditor may be a bank or another company. In the case of bonds and personal debt, the creditor is often an individual. A creditor may be secured, meaning that the debt has a collateral, or unsecured, meaning that the debt has no specific collateral.

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creditors (accounts payable)

the money owed to individuals or firms because they have supplied goods, services or raw materials for which they have not yet been paid (trade creditors), or because they have made LOANS. Amounts falling due for payment within one year are counted as part of a company's CURRENT LIABILITIES in its BALANCE SHEET, while amounts falling due after more than one year appear as part of long-term liabilities.

Some creditors, called secured creditors, are offered collateral or security for their loans by means of a fixed charge on a specific asset owned by a debtor, which they could legally claim in the event of default on the loan.

Other secured creditors are offered security by means of a ‘floating charge’ on the debtors' assets, which would offer them priority in claiming the proceeds from the sale of these assets in the event of default. Unsecured creditors such as trade creditors have less security in the event of default. See DEBTORS (ACCOUNTS RECEIVABLE), CREDIT. CREDITORS RATIO.

Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson