A person or business to whom a liability is owed is called a creditor.

Quick Scoop

Core definition

  • In accounting and business, a creditor is any person or organization that is owed money because they have:
    • Lent funds (like a bank loan or mortgage).
* Supplied goods or services on credit (payment later, not immediately).
  • The business or person who owes the money in this relationship is called the debtor.

Simple example

Imagine a shop that buys inventory from a supplier today but agrees to pay after 30 days.

  • The supplier is the creditor, because the shop owes them money.
  • The shop is the debtor, because it has a liability to pay the supplier later.

Related idea: liability

  • A liability is an obligation to pay another entity in the future, often in cash.
  • On a business balance sheet, creditors are the parties standing on the other side of those liabilities, waiting to be paid.

TL;DR: “A person or business to whom a liability is owed” = creditor.

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