Trade creditors

Trade creditors refer to the amount of money that a business owes to its suppliers or other creditors for goods or services purchased on credit terms – in other words, it is the accounts payables of a business. It is a liability account in the balance sheet of a company.

For example, if a company buys $10,000 worth of inventory from a supplier on credit, it will record a credit to the trade creditors account and a debit to the inventory account. When the payment is made to the supplier at a later date, the trade creditors account will be reduced by the amount paid, and the cash account will be debited.