• The Invoice
  • The Statement

An invoice asks a customer to pay for specific goods or services: it has its own number, the charges, the total and a due date. A statement summarizes a customer's account over a period: the invoices sent, the payments received and the balance still owed. You send an invoice for each sale, and a statement when a customer has several invoices and payments and needs to see where the account stands. A statement doesn't replace the invoices it lists.

The Invoice

OpenStax's Principles of Accounting (§7.1) describes an invoice, "also known as a bill", as a source document: "It provides evidence of the sale and your obligation to pay that amount."

An invoice has:

  • A unique invoice number and date
  • The charges, with quantities, rates and the total
  • A due date and how to pay

The customer pays against the invoice number, and their accounts payable team records it as a bill to pay.

The Statement

A statement lists a customer's account activity for a period, such as a month:

  • The balance at the start of the period
  • Each invoice sent, with its number, date and amount
  • Each payment received
  • The closing balance for the period, and which invoices make it up

The figures come from your record of what each customer owes. OpenStax's chapter 7 key terms describe that record, the accounts receivable subsidiary ledger, as a "special ledger that contains information about all customers and the amounts they owe". The OpenStax sections cited on this page don't define a customer statement itself; the description above is a working one.

Some statements also show how long each unpaid amount has been outstanding. OpenStax's Principles of Finance 2e (§19.4) describes the related internal report, the accounts receivable aging schedule: "To prepare the aging schedule, a classifying of customer account balances is performed with age as the sorting attribute."

When to Send Each

  • Invoice: for each sale or billing period, when you ask to be paid.
  • Statement: when a customer has several open invoices or has paid part of a balance, at the end of a month, or before you follow up on overdue amounts.

Send the invoices first. A statement points to them; it doesn't create a new charge.

Worked Example: A Month on One Account

These are sample figures for a fictional client account in March. The account starts the month with a balance of $0.00.

Invoices sent

  • March 2, invoice #1042: $1,200.00
  • March 16, invoice #1051: $800.00
  • March 28, invoice #1060: $450.00
  • Total invoiced: $1,200.00 + $800.00 + $450.00 = $2,450.00

Payments received

  • March 20: $1,200.00, paying invoice #1042 in full
  • March 30: $300.00 toward invoice #1051
  • Total paid: $1,200.00 + $300.00 = $1,500.00

March statement

  • Balance at March 31: $0.00 + $2,450.00 − $1,500.00 = $950.00
  • Made up of: invoice #1051, $800.00 − $300.00 = $500.00 still owed, plus invoice #1060, $450.00
  • Check: $500.00 + $450.00 = $950.00

The client pays against invoice numbers #1051 and #1060. The statement shows the whole account in one place.

Payments That Don't Match an Invoice

When a customer pays a round amount, as in the $300.00 payment above, record which invoice it applies to and show the remaining balance on that invoice. For more, see how to handle partial payments.

Statements and Billed

Billed's client management page describes a running view of each client's account: "Each client profile in Billed includes a complete history of invoices, estimates, and payments. You can quickly see outstanding balances, payment history, and any overdue invoices at a glance." Its financial reporting page lists "Invoice Reports (paid, partially paid, and overdue)" and says "Each report can be filtered by date range and exported."

Related Guides

FAQ

When should I send a statement instead of an invoice?

Send an invoice for each sale. Send a statement as well when a customer has several open invoices or has made part payments, so they can see the balance and which invoices it's made of. A statement doesn't replace the invoices.

Can a client pay from a statement?

They can pay the balance shown, but ask them to say which invoice numbers the payment covers, so you can apply it correctly. In the sample on this page, the $950.00 balance is made up of $500.00 on invoice #1051 and $450.00 on invoice #1060.

Do I need to send both invoices and statements?

Send invoices for every sale. Statements are optional and help when a customer has several invoices or payments open at once.

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