Liability Credit/Debit is an official business term that describes how a company accounts for the amounts owed to or by its customers or creditors. In simpler terms, it’s a way of keeping track of who owes what and when they need to pay it back. It’s important to understand the different types of liabilities so you can properly manage your finances. Liabilities can be either “credits” or “debits”. Credits are liabilities that require payment at some point in the future, while debits are liabilities that have been paid off or are owed the company. Knowing how to effectively manage these two types of liabilities is essential for running a successful business.