payor vs payee

In any financial transaction, the payor is the individual or organization who initiates the payment, while the payee is the one who receives it. For instance, if a company issues a paycheck to an employee, the company is the payor, and the employee is the payee. Understanding the distinction is crucial for clear documentation, contracts, and bookkeeping. The payor bears the responsibility of transferring funds, while the payee holds the right to receive those funds. Clear roles help avoid disputes and ensure transparency in transactions.