Trade debtors
Learn what trade debtors are, how they sit on your balance sheet and how to manage them for healthy cash flow.
Published Friday 24 July 2026
Table of contents
Key takeaways
- Trade debtors are amounts your customers owe you for goods or services you've invoiced, also known as accounts receivable.
- They sit on your balance sheet as a current asset, because you expect to collect the money within 12 months.
- Trade creditors are the mirror image: money you owe your suppliers, recorded as a liability.
- Managing trade debtors well, with clear credit terms and prompt follow-ups, protects your cash flow.
What are trade debtors?
Trade debtors are the amounts your customers owe you for goods or services you've sold on credit but haven't yet been paid for. They're also called debtors or accounts receivable.
The term can also refer to the customers themselves who owe you money. Say you sell a product on credit and send an invoice for it. The amount owed on that invoice is part of your trade debtors until the customer pays.
Trade debtors vs trade creditors
Trade debtors and trade creditors are two sides of the same transaction. The difference comes down to who owes the money.
A trade debtor is money owed to you, so it counts as an asset. A trade creditor is money you owe a supplier, so it counts as a liability. Trade creditors are also known as accounts payable.
Are trade debtors an asset?
Yes, trade debtors are an asset. They're a current asset, because you expect to turn them into cash within 12 months.
You'll find them recorded on your balance sheet alongside other short-term resources. Healthy trade debtors show that money is on its way in, though only once your customers actually pay.
How to calculate your trade debtors
Your trade debtors figure is the total of all unpaid customer invoices at a single point in time. Add up every invoice you've issued but not yet received payment for.
Say you've sent 3 invoices that are still unpaid: S$2,000, S$3,500 and S$1,200. Your trade debtors total S$6,700. That's the amount recorded as a current asset on that date.
How to manage and reduce trade debtors
Late payments tie up cash you could put to work in your business. According to the Atradius Payment Practices Barometer, an average of 35% of B2B invoices in Singapore were overdue in 2025. Staying on top of what you're owed protects your cash flow.
These habits help keep your trade debtors under control:
- Set clear credit terms so customers know when payment is due
- Invoice promptly and accurately as soon as the work is done
- Run credit checks before offering credit to new customers
- Follow up on overdue payments with reminders and a clear process for chasing overdue invoices
- Offer a small discount for early payment to encourage faster settlement
What to do when a trade debtor doesn't pay
Sometimes a customer won't pay, despite your reminders. When that happens, you'll need to decide how to treat the amount in your accounts.
An invoice you're unsure about collecting is a doubtful debt. If you're confident it won't be paid, it becomes a bad debt. You write it off by removing it from your trade debtors and recording it as an expense. Writing off a bad debt keeps your books accurate and stops you overstating the money you're owed.
Stay on top of your trade debtors with Xero
Keeping trade debtors in check comes down to invoicing on time and knowing exactly who owes you what. Xero accounting software tracks your unpaid invoices in one place, sends automatic reminders and shows what's outstanding in real time.
That means less manual admin and clearer visibility over your cash flow, so you can spend less time chasing invoices. Get one month free.
FAQs on trade debtors
Here are answers to some frequently asked questions about trade debtors.
Is a trade debtor the same as accounts receivable?
Yes. Trade debtors and accounts receivable both refer to the money customers owe you for invoices you've issued.
What is the difference between trade debtors and trade creditors?
Trade debtors are money owed to you and count as an asset. Trade creditors are money you owe your suppliers and count as a liability.
Are trade debtors an asset or a liability?
Trade debtors are an asset. They sit on your balance sheet as a current asset you expect to collect within 12 months.
How do you calculate trade debtors?
Add up all the customer invoices you've issued but not yet been paid for at a given date. That total is your trade debtors figure.
How can I reduce my trade debtors?
Set clear credit terms, invoice promptly and follow up on overdue payments. Offering early-payment discounts can also encourage customers to pay sooner.
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Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.