When a business purchases goods or services but doesn’t make an immediate payment, it incurs a liability. This outstanding amount is recorded in the company’s books as sundry creditors. Effectively managing these liabilities is integral to maintaining financial stability and fostering positive relationships within the business ecosystem. The concepts of sundry debtors and sundry creditors might seem like small details, but their impact on your business is significant.

Therefore, professional and efficient management of sundry creditors is essential to preserve a smooth and continuous cash flow and to prevent fines and late payments of credit dues. To help you be paid sooner, make sure your accounts receivable show a conservative credit period of, say, 30 days and include the due dates for each party receiving credit in their account ledgers. Your cash flow will be impacted if parties fail to make their payments, making it difficult for you to pay your suppliers. Making wise use of credit facilities is a skill that you may learn on the job by keeping track of both your accounts payable and receivable.

1. If the company sells these assets, it will record the resulting income as sundry or miscellaneous income on its income statement.
2. Similarly, suppose one were to look at the books of Orion Enterprises who have availed the credit.
3. When the payment is made to the Creditor in cash, cheque, or electronic transfer, the following entry is passed.
4. Basis for ComparisonDebtorsCreditorsMeaningDebtors are the parties who owes debt towards the company.Creditors are the parties to whom the company owes a debt.What is it?
5. Let’s see how ABC company records this transaction under the ‘Sundry Creditors’ section and treats it as a liability.

Sundry creditors are suppliers who have sold goods in small quantities to the company on credit. They form as accounts receivable while preparing the financial statements. This is understood as the parties or companies to whom the business owes the debt. They both are relevant for an effective working capital management of the company. I have divided my Debtors and Creditors into Trade and Non-Trade for easy identification of transaction types. Trade group includes those from whom we purchase or make sales of our raw materials and products.

Thus, the management of your bills payable or accounts payable account impacts your credibility, health in terms of cash flow and business relationships. Hence, it should be managed with skill and promptly to ensure that your business does not suffer from impediments in cash flow. Sundry debtors, also known as accounts receivable, represent the amounts owed to a company by its customers or clients for goods or services provided on credit. Sundry debtors arise when a company sells its products or services on credit terms, allowing customers to make payment at a later date. Sundry debtors are considered as assets on the balance sheet of a company, as they represent the company’s right to receive payment for goods or services provided. The liability account of a business includes accounts payable, commonly referred to as sundry creditors.

A change in the amount owed to suppliers that affects the company’s financial statements must be recognised to adjust various creditors (accounts payable) to profit. Reducing the amount owing to different creditors will improve your earnings. Minimise liabilities by settling past-due invoices, arranging early payment reductions with suppliers, or contesting and resolving disputes.

Sundry Creditors: Type of Account

1. Sundry creditors mean that you are taking out interest-free credit from your creditors, so you owe them money.
2. Sundry creditors impact a business’s working capital and cash flow management.
3. MyBillBook understands the needs and requirements of small business owners and ensures the Accounts Payable ledger is managed efficiently and there is no delay in payments and cash flows.
4. When creating a company’s trial balance, the amount owed to various creditors needs to be noted on the statement’s credit side.
5. This means the products or services are supplied in advance, and the payment will be made a little later within the set period of time, say 15 to 90 days.

All of our content is based on objective analysis, and the opinions are our own. These are in the nature of long-term loans (e.g., 5-10 years) or debentures that are payable on or after the lapse of the term consented to in the borrowing agreement/document. Fixed liabilities are due to the owners/partners/shareholders of an enterprise, and they are payable only on dissolution/liquidation of the enterprise.

Effective management of sundry debtors is crucial for maintaining a healthy cash flow and minimizing the risk of bad debts. In business, sundry creditors are liabilities as they owe a business an outstanding amount due to a specific transaction. This is based on the credit timeline agreed to between the business offering the services or goods and the business availing of the credit facility on the supply of such services or goods.

Such businesses who provide the goods on a credit basis are called ‘Sundry Creditors’ to the receiving company. All such parties from whom the goods are bought on credit come under sundry creditors or accounts payable, which is another term used for a sundry creditor. Whenever an entity sells its goods on credit to a person (buyer) or renders services to a person (receiver of services), then that person is considered as Debtor and the company is known as a creditor. An sundry liabilities account for individuals or businesses who owe money to a company and whose information and accounts are recorded. A person to whom the firm owes money is called a creditor, when goods are purchased on credit from supplier, commonly suppliers of goods/ services are known as creditors.

What do you mean by sundry debtors and sundry creditors in Tally.ERP 9? How do I fill these entries?

Whenever an accounting transaction is created, at least two accounts are always impacted, with a debit entry being recorded against one account and a credit entry being recorded against the other account. There is no upper limit to the number of accounts involved in a transaction – but the minimum is no less than two accounts. All accounts that normally contain a credit balance will increase in amount when a credit (right column) is added to them, and reduced when a debit (left column) is added to them. The types of accounts to which this rule applies are liabilities, revenues, and equity. All accounts that normally contain a debit balance will increase in amount when a debit (left column) is added to them, and reduced when a credit (right column) is added to them. By keeping track of your payables, you can use credit facilities with no interest and pay the balance due later.

But with the occasional, smaller purchases, well, that can become a paperwork headache pretty fast. Auditors review invoices, contracts, and payment records to confirm the authenticity of sundry creditors. They also check if liabilities are recorded accurately and completely. When creating a company’s trial balance, the amount owed to various creditors needs to be noted on the statement’s credit side.

meaning of sundry debtors and creditors

Sundry creditors are people from whom a person gets goods or services on a credit basis. They are also the businesses or clients to whom a business owes money because of the credit facilities availed in the goods or services in the business’s furtherance. The accounting language calls such firms, clients, parties, companies etc., Sundry Creditors. Sundry creditors are parties to whom the business owes money, while sundry debtors are those who owe money to the business.

Sundry income may include income from a variety of sources, the nature of which may change from one accounting period to the next. For example, late fees, royalties, profits on the sales of minor assets, or foreign exchange gains may qualify as sundry income depending on the nature of the business involved. Income from sources such as interest may be included in sundry income depending on whether a company has substantial interest income due to large cash balances. In those instances, interest income may be shown as a line item separate from sundry income. This is because the money that is given on credit is expected to be returned, or in the case of products or services sold, the business expects money in return for that. On a balance sheet, sundry debtors fall under the category of ‘assets’, specifically listed under the heading of ‘fixed assets’.

Sundry Debtors are customers (individuals) or entities who owe money to a business for goods or services purchased on credit. Sundry income is a nonmaterial source of income and is generally trivial in relation to a company’s income from operations. Even though sundry income may not make up a large part of a business’s income, this does not mean the amounts are negligible. There is no limit to the amount of income that may qualify as sundry income because the defining characteristic is based on the irregularity of the fund source and not the amount of funds generated.