This document represents an asset of the issuer and a liability of the customer. For example, if you have a Net-30 day payment timeline, your client may pay you within 30 days after you send the invoice to them. If you’re still confused between invoices and statements, we’re here to reveal a few ways to tell invoices apart from statements.

It’s a polite reminder your customer still owes you some money and you’d like them to pay up. If you run a small business or work as a freelancer that doesn’t require extensive accounting software, you can use supplied templates for creating your invoices and statements. They are customizable so that you can find the right fonts, insert your company logo, and input the necessary information. While an invoice serves as a formal request for payment for a sales transaction, a statement is an informal reminder that payment is due.

Invoice Automation Software

Accounting software, such as QuickBooks, let you create and send invoices and statements easily. Tools for creating these forms make it simple to keep the concepts separated, while integration with your other financial software and bookkeeping records makes the process fast, too. When your business makes a sale, it’s important to put the transaction in writing. Both invoices and statements offer a way to track debts between buyers and sellers, but how do they differ and when should each be used? We’ll cover the key difference between an invoice and a statement below.

They’re often used when sales are made on credit, and provide details about both paid and unpaid invoices, including an ending balance. If you believe that invoices and statements are documents deductible business expenses that have something to do with a summary of payment items or payment-related procedures, you’re both right and wrong. Invoices and statements are common documents for small businesses.

How to create invoices

For example, if you, as a small business, are creating ten different items for a client then you’ll send them the invoice for the items as soon as they receive it. Again, you can use any invoicing software to create statements, too. Alternatively, apps like Microsoft Word, Excel, Sheets, etc., work just as well.

Keeping the invoice on hand also allows you to make sure that everything you ordered is included and you are not being overcharged. For an example of the statement vs. invoice difference, suppose you send a customer four invoices this quarter, for ​$300​, ​$600​, ​$100​ and ​$460​. By the end of the quarter they’ve paid off the ​$300​ and ​$100​ plus ​$200​ https://online-accounting.net/ off the ​$600​. The statement you send them would show they still owe ​$400​ on one bill and ​$460​ on the other outstanding invoice, for ​$860​ total. If you’re shipping goods to a customer, you send the invoice along with it. Typically, Adobe says, you include payment terms such as due within 30 days or 10 percent discounted if they pay within two weeks.

Sales receipts are generally reserved for transactions with immediate payment where there is no opportunity to send an invoice. While a statement aims to be as current as possible, in the intervening time between sending the statement and receiving the statement, new charges could be incurred. This is part of the reason why statements don’t carry the same legal weight as invoices. For example, a regular customer calls you to place an order for office supplies. Instead, you would prepare an invoice and give it to your customer when they pick up the supplies. The invoice serves the purpose of initiating the payments from the buyer.

Invoice Cycle Time: What Is It and How To Improve It

A statement will generally contain credits and debits of an account along with a request for payment. A statement is the financial status of a customer at a point in time. Moreover, statements are given on a regular basis or as the customer requests. At the same time, statements provide all outstanding transactions over a given period and offer a periodic overview of the account activities. By keeping accurate and timely billing practices, businesses can improve financial organization, reduce payment delays, and maintain customer relationships. In general, sales invoices serve as legally binding documents for the seller and the buyer, providing proof of the transaction and supporting accounting and financial reporting processes.

It’s evidence of a transaction and a formal reminder to make payment. PandDoc is not a law firm, or a substitute for an attorney or law firm. Should you have legal questions on the validity of e-signatures or digital signatures and the enforceability thereof, please consult with an attorney or law firm.

When to use a statement vs invoice

You can seal a deal with a handshake, but most businesses prefer something in writing. Statements and invoices both track unpaid debts for goods or services but they do it in different ways. When you make out your bookkeeping, accounting rules also require you to know the difference between invoice and statement and how they’re treated. Unlike invoices and statements, receipts show that payment has been made already. They will usually contain a breakdown of individual charges, as well as any sales tax and whether a debit or credit card was used for the transaction. As opposed to a statement your business would send to a customer, financial statements are internal documents made for record-keeping purposes.

• Banks often provide statements to their clients, but companies also use these to keep track of finances.
• A statement is meant to be informative, rather than demanding, and serves as a reminder that payment hasn’t happened yet.
• An invoice can also contain the charges for the goods purchased or the services provided.
• You send an invoice when you want someone to pay you for goods or services you provided.
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On the other hand, statements encompass multiple transactions and offer clarity to the customer regarding the totality of their account’s outstanding activity. Statements aren’t requesting immediate payment but are periodic reminders of the account’s unsettled balances. An invoice is an initial request for payment for goods or services rendered.

Accountant Jobs

A statement sent to a customer, showing billings to and payments from the customer during a specific time period, resulting in an ending balance. The purpose of the statement is to remind a customer of sales on credit that have not yet been paid to the seller. An invoice is a legal document that creates an obligation for the client to pay the due amount within the specified time frame. Whereas, statements present the transaction details between you and your clients during a specific time period. Despite their similarity, invoices and statements serve different purposes in your small business’s financial operations.

• We bet you are tired of the manual and time-consuming process of handling invoices.
• Include statements you receive from vendors in your accounting books.
• It’s important to have a tracking system in place so you know which bills have been paid.
• When a customer makes a purchase or receives a service, the vendor or service provider generates an invoice that itemizes the details of that specific transaction.
• We’ll look at invoices and billing statements, covering what they do, the differences between them, and what to include to get paid on time.
• Invoices and statements are common documents for small businesses.

For example, a fitness studio that offers classes or personal instructions subscription can use both invoice and statement. You may find that your accounting software provider offers billing statement templates that allow you to automatically build statements, saving a lot of time and effort. We’ll look at invoices and billing statements, covering what they do, the differences between them, and what to include to get paid on time.

This ensures that your small business can keep a good cash flow, and makes bookkeeping much easier. It’s important to remember that a statement amount is not always the current amount owed. If you have a statement dated July 31st, it may indicate that you owe entire amounts from four invoices and a small amount from a v invoice. An invoice is a detailed bill delivered when you provide services or goods to a customer.