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 utilize statements of accounts?

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Statement of Accounts vs. Invoice

An invoice and a statement of accounts are not the same thing. The account statement is a complete financial record of transactions between the company and the client within a monthly period. Within 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 is 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 organize client transactions. Keeping proper invoice documentation will make the process of creating statements of accounts effortless.

Why are Account Statements Important?

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.

Sending Out Customer Statements

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:

• Client Information: Always include the client’s information at the top of the document to illustrate who the account holder is
• Company Information: As all documents and reports created by your company, they should contain the business name, contact and location information
• Date: State the date range which the statement falls under- this is typically a monthly span but sometimes quarterly and yearly account statements are also issued
• Account Summary: Displayed at the top of the accounts statement, this provides an overview of the current transactional balance between business and client- including previous balance, credits, new charges, and total balance due
• Invoice Number: All invoice amounts sent out within the date range must be listed in the main body of this document, breaking down the charges, in chronological order of date
• Charges: The amount charged per invoice given
• Credits: This is the amount owed for the account, minus all payments made, or credit available
• Account Current Balance: This is the amount owed by the customer that must be paid to your company at the time of the statement

Quickbooks accounting software offers invoicing and statement templates to simplify the process for your business and keep all of your customer accounts organized and up to date. Why not try it free today?