A statement of account is the documentation of transactions between your small business and each client within a specific time frame. This document is a full overview of the business completed between you and an individual customer, typically within a monthly period.
So how should small businesses create and utilise statements of accounts?
An invoice and a statement of accounts are not the same things. The account statement is a complete financial record of transactions between the company and the client within a monthly period. This statement contains a list of all invoices created within that time frame.
Where a sales invoice is a bill for one transaction only, a statement of account definition refers to the complete list of all invoices attached to that client within a stated period. This document is handy for both small businesses and their clients, as it shows the monthly transaction history and account activity between the two, all in one place.
Creating invoices through Excel sheets can run the risk of invoicing mistakes, which can then reflect poorly on your business and the subsequent account statement. It is best to use accounting software that will automatically update and organise client transactions. Keeping proper invoice documentation will make the process of creating statements of accounts effortless.
Find out how your business is performing. Complete this short questionnaire to receive a free personalised Business Health Check report!
In a statement of account, the document reflects the ongoing transactional relationship between your business and your clients. This financial overview is vital for both the company and the client. It illustrates the overall state of affairs of the working relationship.
The main reason behind creating this statement is to show the outstanding amount, if any, a client may owe to your small business. Similar to a bank statement, this document illustrates the customer’s transactions on a monthly basis.
A statement of account might look like a monthly statement issued to a client. Typically, companies issue monthly statements to their clients with up-to-date transactions, as shown through a PDF file and sent through email. Sending off a statement of account to a client at the end of the month is a good way to point out if they have overdue accounts. Accounts receivable is the money owed to a business by the client, which can be found in these statements.
If a customer’s statement displays a zero balance, they are up to date on all payments. Typically customers who have zero balances do not need to be sent this document unless they specifically request it. However, these customer statements are still used internally within a business to keep track of financial reports and transactional history for managing customer relations and in case of disputes.
Suppose your small business offers customers the ability to make purchases on credit. In that case, these statements should always be sent out to the clients at the end of the month to bring awareness to the overdue credit and outstanding payments.
Essential aspects in an account statement include:
Quickbooks accounting software offers invoicing and statement software to simplify the process for your business and keep all of your customer accounts organised and up to date. Why not try it free for 30-days?
While every care has been taken to ensure the accuracy of the information presented as at 01 May 2023, Intuit is not providing you with professional advice and we recommend you obtain your own professional advice. Intuit is not liable for your use of the information presented.
Sign up for our quarterly newsletter and receive educational and interesting content straight to your inbox.
Want more? Visit our tools and templates!
