If you’re selling a product or service, at some point you need to make money off of it. And you might be assuming that statement vs invoice is simply a matter of nomenclature. However, it’s a lot more complicated than that.
The two can serve dissimilar purposes and have contrasting effects on various industries. So, what is the difference between a statement vs invoice? In this article, you’ll know their distinction and their right purposes.
Keep reading to help avoid misunderstandings in issuing the wrong document. Let’s get into it! Here
What Is a Statement?
In bookkeeping and accounting, a statement of account is a periodic summary of the activity in a customer’s or client’s account. The statement may be generated monthly, quarterly, or annually.
It is typically sent along with any invoices or other documentation due at the time the statement is generated. Additionally, it may show all activity in the account during the period, or may only show activity since the last statement.
What Is an Invoice?
An invoice is a document that a company sends to another party to request payment for goods or services. The invoice typically includes details such as:
- Company’s name
- Contact information
- Company logo
- The date
- Invoice number
- Description of the products or services
The invoice should also incorporate the total amount due and the payment terms.
Creating an Online Invoice
There are a few steps you need to take to create an invoice online. First, you need to find a reputable website that offers online invoicing services. Once you find a website that you like, you will need to create an account.
After you create an account, you will be able to log in and start. When you create invoice online, make sure to enter your client’s information, the services you performed, and the amount you are charging.
Additionally, be sure to put your payment terms and conditions. If you accept credit cards, you can include the processing details on the invoice. Once you have all of the information concluded, you may generate your invoice and send it to your client.
The Risks of Issuing the Wrong Document
While both documents indicate what was purchased and the amount due, there is a crucial distinction between the two. A statement is simply a list of items that were purchased, along with the prices. An invoice, on the other hand, is a payment request.
If a business accidentally issues a statement when an invoice is due, the customer may not realize they owe money. This could lead to delinquent payments, or even worse, the customer may dispute the debt entirely.
This will greatly cause confusion or resistance from the customer. In either case, issuing the wrong document can damage customer-client relationships and may hinder the ability to collect payments.
A Guide on When to Use a Statement vs Invoice
An invoice and a statement are similar in that they both list charges owed by a customer. However, a statement also includes payments made and credits applied, while an invoice only lists charges.
This can make a big difference when trying to understand what you owe. By understanding the difference between a statement vs invoice, you’ll surely save yourself from the hassle of misunderstanding.
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