What is the Difference between a Statement and an Invoice for Your Business Needs

Understanding Statements and Invoices

Both statements and invoices are essential documents in business transactions, but they serve different purposes. An invoice is a request for payment issued by a seller to a buyer, detailing the products or services provided, their costs, and payment terms. It is typically generated after a sale has occurred. In contrast, a statement is a summary of all transactions between a buyer and seller over a specific period. It includes all invoices, payments received, and any outstanding balances, providing a comprehensive view of the buyer's account status.

Key Differences Between Statements and Invoices

Understanding the distinctions between a statement and an invoice can help businesses manage their financial records more effectively. Here are the main differences:

• Purpose: Invoices are used to request payment, while statements provide a summary of account activity.
• Frequency: Invoices are issued per transaction, whereas statements are typically sent monthly or quarterly.
• Content: An invoice lists specific items or services and their costs, while a statement aggregates multiple invoices and payments.
• Due Dates: Invoices include a due date for payment, while statements do not usually specify a payment deadline.

When to Use Each Document

Knowing when to use a statement versus an invoice can streamline your accounting process. Use an invoice when you need to request payment for specific goods or services rendered. This document should be sent promptly after the transaction. Use a statement when you want to provide a client with an overview of their account, especially if they have multiple transactions. This is useful for tracking payments and understanding outstanding balances.

Creating Invoices and Statements with airSlate SignNow

With airSlate SignNow, you can easily create and manage both invoices and statements. The platform allows you to prepare and send documents securely and efficiently. You can customize your invoices to include your branding and payment terms, ensuring clarity for your clients. For statements, you can compile all relevant transactions into a single document, making it easy for clients to review their account activity. This streamlined process enhances your digital document workflow and improves communication with clients.

Common Use Cases for Statements and Invoices

Different scenarios may require the use of either a statement or an invoice. Here are some common use cases:

• Freelancers: Freelancers often send invoices for individual projects and may follow up with statements to summarize their earnings over a month.
• Subscription Services: Companies offering subscription services use statements to inform customers about their billing history and upcoming charges.
• Retail Businesses: Retailers issue invoices for sales transactions and may provide monthly statements to customers with credit accounts.

Best Practices for Managing Invoices and Statements

To maintain clear financial records, consider implementing these best practices:

• Timeliness: Send invoices promptly after a sale and statements regularly to keep clients informed.
• Accuracy: Ensure all details on invoices and statements are correct to avoid confusion and disputes.
• Follow-Up: Use reminders for outstanding invoices and follow up with clients regarding their statements to encourage timely payments.