Trade Creditors

Definition. Trade creditors are suppliers a business owes money to for goods or services bought on credit as part of normal trading. The term is used in UK accounts; in US terms it is the same as accounts payable.

Where it sits in the accounts. Trade creditors are a liability. They appear on the balance sheet under “Creditors: amounts falling due within one year”, because supplier invoices are normally paid within weeks or months.

Worked UK example

A Shoreditch café buys £5,000 of coffee beans on 30-day terms on 1 March.

• 1 March, purchase on credit: Debit Purchases £5,000, Credit Trade creditors £5,000
• 31 March, supplier paid: Debit Trade creditors £5,000, Credit Bank £5,000

Between those dates the £5,000 shows as a trade creditor on the balance sheet.

FAQs

Are trade creditors an asset or a liability?

A liability. They are amounts the business owes, so they reduce net assets until paid.

Is trade creditors the same as accounts payable?

Yes. “Trade creditors” is the UK term and “accounts payable” is the US term for the same balance.

What is the difference between trade creditors and trade debtors?

Trade creditors are suppliers you owe. Trade debtors are customers who owe you.

Tip: creditor days (trade creditors ÷ cost of sales × 365) shows how long you take to pay suppliers on average.

Related terms: Trade debtors · Credit terms · Liabilities · Credit sale