A debit or credit is how a payment is classified in the business world. Debits are payments made to purchase goods or services, whereas credits are refunds for goods or services that were returned. While both types of payments represent a change in money flow between two entities, the direction of the transaction–from one entity to another–determines whether it’s classified as a debit or credit. By understanding and tracking these changes, businesses can better keep track of their finances and make wise decisions about how to use their cash.