What is Sundry Creditors? Meaning and Examples

Sundry Creditors Meaning

Before proceeding to the other details, a simplified description of a sundry creditor can help businesses record it correctly in the books of accounts.

Sundry creditors are businesses that provide goods and services based on credit, and hence many businesses owe them. In simpler terms, a sundry creditor is an individual entity which supplies goods and services on credit or even offers credit facilities during the sales of goods and services. If you buy goods on credit from a business, the business will be a sundry creditor.

The term sundry refers to miscellaneous, which means various or multiple. Because these businesses provide miscellaneous goods and services on credit, they are known better as sundry creditors. Understanding miscellaneous creditors is vital for correct accounting practices, and also comply with Indian Accounting Standards (IND AS).

Sundry creditors' meaning can be more easily understood with examples as cited below.

What Is Accounts Payable?

In accounting, an accounts payable refers to the owed sum of money that a business owes to its vendors and suppliers. In the balance sheet of a company, accounts payable is treated as a current liability. The main purpose of the accounts payable is to understand the current cash flow of the company, and keep a check on the debt to suppliers.

Also, by understanding the accounts payable, companies can know their short-term loans and long-term loans. The sign of a good financial position is low accounts payable, as it implies that the company is paying off its debts in time.

Sundry Creditors Examples

Indian startups and MSME businesses involve countless transactions on credit. This is why businesses need to understand the meaning of sundry creditors better.

Here is a quick example to explain what is sundry creditors.

M/S Dasram Traders ordered a few office supplies from their supplier in Ashok Vihar, New Delhi on 18th May, 2025. The last date for payment of the bill was on 1st July, 2025.

• Dasram Traders will record this transaction as sundry creditors in their books of accounts.
• The supplier business will record this transaction as sundry debtors in their accounting book.

You can take a look at the below table to understand how sundry creditors and sundry debtors are recorded in accounting practices.

Sundry Creditors Journal Entry

The accounting adjustment of miscellaneous creditors is by debiting the expense account and crediting a sundry creditors’ account. It indicates that an expense has been incurred (diminishing the equity) and an obligation (a liability) has been created. Let us take a simple sundry creditors example with a case study.

SoulFry, an Indian cuisine business in Bengaluru, bought groceries worth ₹5,000 from a local supplier on credit.

Balance Sheet Entry For SoulFry Current Liabilities: Sundry Creditors - ₹5,000

Balance Sheet Entry For Supplier Current Assets: Accounts receivable - ₹5,000

Sundry Creditors in Balance Sheet

The accounting treatment of a sundry creditor in balance sheet is of two types. You may ask if sundry creditors debit or credit in the business books.

• For the business that owes the amount, sundry creditors are recorded as a Current Liability. It is recorded as a liability because the business owes the amount to the supplier/vendor.
• For the business that will receive the amount, it is recorded as Accounts Receivable.

Sundry Creditors in Trial Balance

The sundry creditors journal entry is different in a trial balance than on a balance sheet. In a trial balance, this is recorded on the credit side as the business treats this as a commercial liability.

Benefits of Recording Sundry Creditors

Let's understand some of the benefits for any business to record sundry creditors:

Helps in Liquidity Analysis

By classifying miscellaneous creditors as current liabilities, stakeholders can determine the liquidity position of the company. If a company has high current liabilities, it may indicate potential cash flow problems, which can impact the company's ability to repay short-term debt.

Serves As a Financial Health Indicator

A company can easily understand the total amount it owes to miscellaneous businesses and vendors by checking sundry liabilities. This works as a financial health indicator, as a higher number of creditors can imply that the business is running a potential loss.

Working Capital Impact

Sundry liabilities often signal the company about management of working capital. Proper management of miscellaneous creditors helps to enhance working capital, which enables the firm to invest in growth avenues and keep operations efficient.

Maintains Supplier Relationships

A company is dependent on a large number of suppliers and vendors, where prompt payment and on-time delivery are always appreciated. By recording miscellaneous creditors, companies can easily understand their market debts, and the number of suppliers that are pending to be paid. This also fuels trust and maintains a positive relationship with the vendors and suppliers.

Audit and Compliance

The company books of accounts are submitted for annual audit. Auditing helps a company to maintain a positive financial position, and also provides transparency to its investors and creditors. By recording miscellaneous creditors properly, firms can submit their financial statements for audit. Also, proper recording of business creditors prevents cases of fraudulent accounting practices.

Disclosure Requirements

The liquidity, financial status, and business efficiency of a company are found out by disclosure of accounts. Disclosure of the nature of business creditors is usually required by companies in the financial statement notes. This disclosure is an added explanation to stakeholders regarding the company's obligations and terms with its creditors.

Learn more about how to maintain a transparent financial reporting in your company.

How to Manage Sundry Creditors Effectively?

Without having proper sundry creditor management, a business can run the risk of tight cash flow and piling up debts. Strategic actions such as recording sundry liabilities can help businesses to make on-time payments, and also maintain a healthy partner relationship. These are a few ways to manage sundry creditors effectively:

Having a Centralized System

A centralized system is necessary, as it directly overlooks all the transactions in one go. For example, when a centralised system is established, you can quickly track all the real transactions, and locate the actual amount of sundry liabilities.

Activating Prompt Payments

A business can only schedule long-due payments once it understands the miscellaneous liabilities. Delayed payments can often turn the relationship with the stakeholders negative, and may also lower the credit score. Investors tend to invest more in those businesses that have a better credit score with a healthy transaction history. Depending on the sundry creditor number, you can take the initiative of creating an automatic payment.

Ease of Reconciliation

The Balance Sheet and Trial Balance are the two important financial instruments for any business to comprehend the current financial position. This makes the reconciliation of accounts a significant part of bookkeeping. You will have to reconcile your internal records with the creditors and tally for any mismatch. A sundry creditor list eases this process, as it quickly finds out the dues and unauthorized purchases. This also prevents all future disputes with suppliers and vendors.

Negotiating Payment Terms

If your business defaults on payment too often, it can lead to multiple problems in maintaining the relationship with the creditors. Knowing who the business creditors are can help you with sending prompt notices to businesses. This may stretch payment dates or obtain early payment discounts. Moreover, your business can easily find out if it is going to face a deficiency in cash flow because of too many sundry creditors, it can negotiate longer payment terms with creditors.

Credit Policies

Your business can frame credit settlement policies by having a sundry creditor list. Such policies help resolve cases of default payments, understanding credit limits, and hence avoiding shortages in fund flow. By revising these policies, businesses can evolve their business practices updated with the market conditions, which ensures that there is better credit management.

Monitor Financial Health

To keep an eye on the financial metrics, a business needs to regularly monitor the financial health as well as the overall financial performance. Sundry creditors help a business to keep a close eye on the necessary financial metrics, such as Debt-to-Equity Ratio, and cash flow ratio. Your business can effectively manage the bills payable and check for regions of improvement.

Also get to know the main differences between cash flow and fund flow for your business.

Difference Between Sundry Creditors and Sundry Debtors

There are certain differences between sundry debtors and creditors, here are they:

Conclusion

For businesses, sundry creditors are an integral component of financial management. Better management of the business involves correct financial reporting, promotes healthy cash flows and also develops better relations with the vendors. SMEs and Indian startups have been reported to have a deficiency in credit management, and they can revive this by adopting the above strategies. This blog clearly illustrates the meaning of miscellaneous creditors, their difference with sundry debtors and ways to manage them.