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

Understanding Invoices

An invoice is a formal document issued by a seller to a buyer, detailing the products or services provided, along with their respective costs. It serves as a request for payment and includes important information such as the invoice number, date of issue, payment terms, and due date. Invoices are typically used in business transactions to ensure that both parties have a clear understanding of what has been purchased and the amount owed.

For example, when a freelancer completes a project for a client, they may send an invoice that outlines the work done, the hourly rate, and the total amount due. This document is essential for record-keeping and financial tracking for both the seller and the buyer.

What is a Statement?

A statement, on the other hand, is a summary of all transactions that have occurred over a specific period, usually a month. It provides an overview of the account balance, including payments made, outstanding invoices, and any credits or adjustments. Statements are often used by businesses to keep customers informed about their account status and to remind them of any outstanding balances.

For instance, a bank statement will show all deposits, withdrawals, and fees incurred during the month, helping account holders manage their finances effectively. Similarly, a company might send a statement to a client that includes all invoices issued and payments received during the billing cycle.

Key Differences Between Invoices and Statements

While both invoices and statements are essential documents in business transactions, they serve different purposes and contain distinct information. Here are some key differences:

• Purpose: An invoice requests payment for specific goods or services, while a statement summarizes the overall account activity.
• Detail Level: Invoices provide detailed information about individual transactions, whereas statements offer a broader overview of multiple transactions over time.
• Frequency: Invoices are issued as needed for specific transactions, while statements are typically generated on a regular schedule, such as monthly.
• Payment Terms: Invoices include specific payment terms and due dates, while statements may simply indicate the total amount due without detailed terms.

When to Use Each Document

Understanding when to use an invoice versus a statement can enhance your business's financial management. Use invoices when you are providing goods or services and require payment. They are crucial for tracking sales and ensuring timely payments.

Statements are useful for ongoing relationships with clients, especially when there are multiple transactions. They help maintain transparency about account balances and can prompt clients to settle outstanding invoices. Regularly sending statements can improve cash flow and strengthen client relationships.

Creating Invoices and Statements Digitally

With digital document solutions like airSlate SignNow, creating and managing invoices and statements becomes more efficient. Users can easily prepare and send invoices for eSigning, ensuring that all parties have a record of the transaction. Additionally, creating statements can be streamlined by merging multiple invoices into a single document, providing a comprehensive view of account activity.

Utilizing features such as Create Form and Merge PDF allows businesses to customize their documents, ensuring they meet specific needs while maintaining a professional appearance. This approach not only saves time but also enhances accuracy and reduces the risk of errors in financial documentation.