Meaning of Debtor and Creditor in Hindi and English, with Examples

What is a debtor in accounting?

A debtor is anyone who owes the business money on the balance sheet date. The most common case is a credit sale: you deliver goods today and the customer pays in 30 days. Until the money arrives, that customer is your debtor.

Example (illustrative): A mobile shop in Laxmi Nagar sells phones worth ₹20,000 to a local reseller on 15 days’ credit. The reseller is now a debtor for ₹20,000. When the reseller pays, the debtor balance becomes nil.

Debtors come in a few forms:

• Trade debtors (sundry debtors): customers who owe money for goods or services sold in the normal course of business. Companies show these as trade receivables.
• Bills receivable: amounts due from customers who have accepted a bill of exchange.
• Other debtors: advances to employees, security deposits and similar amounts owed to the business that did not arise from sales.

What is a creditor in accounting?

A creditor is anyone the business owes money to on the balance sheet date. The most common case is a credit purchase: a supplier delivers stock now and you pay later. Until you pay, that supplier is your creditor.

Example (illustrative): The same shop buys stock worth ₹50,000 from a distributor on 30 days’ credit. The distributor is a creditor of the shop for ₹50,000.

• Trade creditors (sundry creditors): suppliers of goods and services used in the business. Companies show these as trade payables.
• Bills payable: amounts owed on bills of exchange the business has accepted.
• Other creditors: lenders such as banks, and parties owed for expenses (for example, an unpaid electricity bill or outstanding rent).

A bank that has lent you money is also a creditor. It is a lender, not a trade creditor, and the loan is shown separately under borrowings.

Debtors meaning in Hindi and creditors meaning in Hindi, with examples

Debtors meaning in Hindi is देनदार (dendar): the person who has to pay you. Creditors meaning in Hindi is लेनदार (lendar): the person you have to pay. Rahul buys goods worth ₹20,000 from your shop on credit, so Rahul is your debtor (देनदार). You buy stock worth ₹15,000 on credit from Mehta Traders, so Mehta Traders is your creditor (लेनदार).

Sundry debtors and sundry creditors simply mean all your small credit customers and suppliers grouped under one head. If a Hindi class note asks “debtors ka matlab kya hota hai”, the answer is: whoever owes you money.

Difference between debtor and creditor

The two are mirror images: one party’s debtor is the other party’s creditor. In the mobile shop example, the shop records the reseller as a debtor, while the reseller records the shop as a creditor for the same ₹20,000.

One party can be both. If you sell to a firm and also buy from it, you may have a debtor balance and a creditor balance for the same name. Accountants usually set one off against the other with a journal entry, once both sides confirm the figures in writing.

Debtor and creditor terms: meaning in English and Hindi

These are the related terms you will meet in a balance sheet or in Tally, with a one-line meaning for each. To see where each one sits in the full layout, read our balance sheet format as per Schedule III.

Debtor kya hota hai? Creditor kaun hota hai?

Debtor (देनदार) वह होता है जिससे आपको पैसा मिलना है, जैसे उधार पर माल लेने वाला ग्राहक। Creditor (लेनदार) वह होता है जिसे आपको पैसा देना है, जैसे उधार पर माल देने वाला सप्लायर। याद रखने का आसान तरीका: देनदार देगा, लेनदार लेगा। बैलेंस शीट में देनदार एसेट और लेनदार लायबिलिटी होते हैं।

Journal entries for debtors and creditors

Debtors and creditors are personal accounts, so the golden rule is “debit the receiver, credit the giver”. A customer who receives goods on credit is debited. A supplier who gives goods on credit is credited. Our guide explains the personal account rule and the other two golden rules of accounting in more detail.

The entries below use illustrative figures and leave out GST so the debtor or creditor movement is easy to see. In practice, a GST-registered business adds output or input tax lines, as shown in our journal entries questions with answers.

Where debtors and creditors appear in the balance sheet

Debtors appear on the assets side as current assets, and creditors appear on the liabilities side as current liabilities. For companies, Schedule III to the Companies Act, 2013 uses the headings “Trade receivables” and “Trade payables”.

Schedule III asks for more than a single figure. As explained in ICAI’s guidance note on the schedule, companies must give an ageing schedule for trade receivables and trade payables. Trade payables must also be split into dues to micro and small enterprises and dues to others. A provision for doubtful debts is deducted from trade receivables, so the balance sheet shows the amount the company actually expects to collect.

Sole traders and partnership firms are not bound by Schedule III, but the same logic applies. Sundry debtors go under current assets and sundry creditors under current liabilities.

Debtor days and creditor days: a worked example

Debtor days tell you how long customers take to pay. Creditor days tell you how long you take to pay suppliers. Both come from simple turnover ratios.

• Trade receivables turnover = Credit sales ÷ Average trade receivables. Debtor days = 365 ÷ that turnover.
• Trade payables turnover = Credit purchases ÷ Average trade payables. Creditor days = 365 ÷ that turnover.

Illustration: A wholesaler’s credit sales for the year are ₹36,00,000 and average debtors are ₹4,50,000. Turnover is 8 times, so debtor days are 365 ÷ 8, about 46 days. Its credit purchases are ₹24,00,000 and average creditors are ₹2,00,000. Turnover is 12 times, so creditor days are about 30 days.

The gap is the insight. This wholesaler pays suppliers in about a month but waits about a month and a half to collect. It has to fund roughly two weeks of trade from its own cash or a bank limit. Accountants watch this gap closely because it drives working capital needs.

The 45-day rule for payments to micro and small enterprises

If your creditor is a micro or small enterprise, the law sets a deadline for paying it. Section 15 of the MSMED Act, 2006 requires the buyer to pay within the period agreed in writing, which cannot exceed 45 days from acceptance of the goods or services. With no written agreement, the limit is 15 days. Late payment attracts compound interest at three times the bank rate notified by the RBI, and the supplier can file a case through the government’s MSME Samadhaan portal.

Income tax adds a second consequence. Section 43B(h) of the old Income-tax Act, 1961 continues as Section 37(2)(g) of the Income-tax Act, 2025 from 1 April 2026. Under it, an amount owed to a micro or small enterprise beyond the MSMED time limit is deductible only in the year it is actually paid. An unpaid supplier bill at 31 March can therefore increase that year’s taxable profit.

In practice, this is why accountants tag each creditor’s MSME status in the ledger. Ask suppliers for their Udyam registration details when you create the account, and check how the rule applies to your specific supplier before relying on it.

Debtors and creditors in Tally

TallyPrime has two predefined groups for these accounts: Sundry Debtors, under Current Assets, and Sundry Creditors, under Current Liabilities. Every customer ledger goes under Sundry Debtors and every supplier ledger under Sundry Creditors.

• Turn on bill-wise details for each party ledger, so every invoice and payment is matched and you can see exactly which bills are overdue.
• Use the outstanding receivables and payables reports to see ageing by party.
• Enter the party’s GSTIN in the ledger so GST reports pick up the right state and tax type.

If you want to set up party ledgers, bill-wise tracking and outstanding reports on real company data, the Tally course at IPA covers them in the practical sessions.

How accountants manage debtors and creditors

Good debtor management brings cash in on time; good creditor management pays on time without paying early for no reason. The routine is the same in most offices.

Debtor and creditor outside accounting

The words also have a wider legal meaning. In banking, a borrower is the debtor and the bank is the creditor. Under the Insolvency and Bankruptcy Code, 2016, creditors are split into two types. A financial creditor is owed a financial debt, such as a loan given for interest. An operational creditor is owed for goods or services supplied, which covers most trade creditors. The type matters because the Code gives the two groups different roles when a company goes through insolvency.

Common mistakes students make

• Reversing the Hindi terms. Dendar has to pay (debtor); lendar has to receive (creditor).
• Calling every customer a debtor. A cash customer who has paid in full owes nothing and is not a debtor.
• Crediting a debtor on a credit sale. The customer receives the goods, so the customer is debited.
• Showing creditors on the assets side. Creditors are always a liability for the business that owes them.
• Adding the doubtful debts provision to debtors. It is deducted from debtors, not added.

These basics come up in almost every accounts job interview, so they are worth practising aloud. Our list of accounting interview questions and answers includes the debtor and creditor questions employers ask most.

How we teach this at IPA

In the BAT course at IPA, debtors and creditors belong to the first module, business accounting, and are then followed into Tally Prime or BUSY. Every entry you post is taken on to where it ends up, whether that is a GST liability, a TDS deduction or a taxable income figure, so the ledger balances are never just numbers on a page.

Frequently asked questions