Who is Debtor ?

Debtor is our customer. We sell the goods to him on credit. If we sell him goods with cash or cheque or credit card, then there is no need to open debtor account in books. Debtor’s closing balance is also our current asset and it is shown in balance sheet’s asset side. It is also mention in current asset when we calculate working capital for maintaining good working capital management.

To know the amount due from debtors are very important for business organization because

With this company can analysis different amount due from different debtors by making filter in excel and know different questions like what is the amount due between the two ranges or two periods.

If any debtor is not paying after maturity, then we can take action after calculation total receivable amount from him.

To know the value of about debtor is also very important for calculation of average collection period and debtor turnover ratio.