What is a trade debtor?

Definition of a trade debtor

A trade debtor is a customer who hasn't yet paid you for your goods or services.

The amount that goes on your business's balance sheet for trade debtors is the sum of all its unpaid invoices as at that point in time.

For example, if you issued two invoices for £100 each on 1st March, and you were paid for these on 1st April, as at 31st March, your balance sheet would show a trade debtors figure of £200.

If your business is registered for VAT, then the trade debtors figure will always show inclusive of VAT, because that is the amount your customers will pay you.

Keeping track of invoices

FreeAgent's accounting software features an Invoice Timeline, so you can see at a glance which invoices have been paid and who you need to chase up.

Disclaimer: The content included in this glossary is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so should not be relied upon. You are responsible for complying with tax law and should seek independent advice if you require further information about the content included in this glossary. If you don't have an accountant, take a look at our directory to find a FreeAgent Practice Partner based in your local area.

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