Creditors Debtor difference: simply explained for SMEs in Switzerland
As a founder or entrepreneur of a Swiss SME, it is crucial to understand the difference between creditors and debtors.
Both terms have a direct impact on your balance sheet, liquidity and financial planning — and therefore on the stability of your company.
What are creditors?
Creditors are suppliers or service providers to whom your company still owes money.
They arise when you purchase goods or services but the invoice has not yet been paid.
Typical examples:
- Open supplier invoices
- Unpaid service bills
Creditors are short-term liabilities and appear on the liabilities side of the balance sheet.
What are debtors?
Debtors are customers who still owe money to your company.
They arise when you provide a service or sell goods and the invoice is still outstanding.
Typical examples:
- Outstanding customer invoices
- Services not yet paid
Debtors are part of current assets and appear on the asset side of the balance sheet.
Difference between creditors and debtors — simply explained
- Creditors: You owe money
- Debtors: You are owed money
Both positions influence your liquidity because they determine when money leaves or flows into your company.
How do creditors and debtors influence balance sheet & liquidity?
- High accounts receivable
→ Turnover has been achieved but money has not yet been received
→ may lead to liquidity bottlenecks - High creditor inventories
→ Invoices are pending, money remains with the company for the time being
→ can secure liquidity in the short term, but involves payment risks
A healthy relationship between the two is crucial for stable financial planning.
Common mistakes when dealing with creditors & debtors
Many SMEs make typical mistakes when managing outstanding invoices, for example:
- lack of overview of outstanding debtors
- Too long payment periods without payment reminders
- late payment of vendor invoices
- Mixing liquidity and profit
- no regular reconciliation of accounts
These errors can quickly lead to liquidity problems or unnecessary costs.
What really works in practice
For a healthy financial structure, you should:
- Actively monitor debtors (clear payment deadlines & reminders)
- Plan creditors strategically without exceeding payment terms
- Create regular liquidity overviews
- Reconcile open items regularly
- Keep accounting up to date
This allows you to keep track of your payment flows at all times.
Conclusion: Manage creditors & debtors correctly
The difference between creditors and debtors is simple — but the impact is significant.
Anyone who has outstanding receivables and liabilities under control ensures the liquidity, solvency and stability of their company.
At MKY Group, creditor and debtor processes are not only recorded, but actively managed — as part of structured digital accounting for Swiss SMEs.
If you know your open positions, you can manage your company more safely.
