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.
Got questions? Ask Emily!
FreeAgent's Chief Accountant Emily Coltman is available to answer your questions in the comments.