What Is Statement Of Account?
A statement of account is a business document that shows all transactions that happened between you and a particular customer for a given period.

Generally, owners of business send statements of accounts to their customers to inform them how much they owe for credit sales during that period. This post walks you through the contents of statement of account and how to file it for customers.

IMPORTANCE OF STATEMENT OF ACCOUNT
A statement of account is an important way to provide your customers with a summary of the products and services that were billed to them.  Statement of accounts also helps the business owners confirm the payments that the customer has already made for a statement period. This statement period is usually a month.

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The statement turns out to be useful when you have customers who are coming back to patronize your business (recurring customers) for whom you are expected to create invoices on a monthly, quarterly, or annual basis. Statement of account is usually in addition to the individual invoices sent to the customer for each purchase that he makes.

Since the payments are automatically generated on a periodic basis, it is easier to view all invoices sent and payments received in the same place for one particular customer. It can also be used as a tool for payment reminders as it gives the business owner an idea about the customer’s recurring expenses. When this happens, the business owner can notify the customer for payments in advance.

Whenever a business has inconsistency in records, the summary report of the statement enables a business owner to check if the customer has paid his dues.

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The statement can also aid the business owner check whether the declared amount due includes the payments made by the customer so far. It can even help catch transactions that have accidentally been recorded twice.

The statement of accounts also provides business owners an accurate and comprehensive price record for each item sold to their customers. This makes it possible to track information associated to a customer (like the purchases made by the customer) for any time span and helps in identifying errors.

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SAMPLE OF A STATEMENT OF ACCOUNT
A statement of accounts is divided into two halves. The top half and bottom half. The top half contains an overview of the customer’s accounts while the bottom half contains the details of each transaction.


What Is Statement Of Account?

ACCOUNT OVERVIEW
The top half of the statement shows the name and address of both the business owner and the customer.

It also details the time interval for which the statement was prepared. Some businesses use the last day of each month as a closing date. In that case, the statement will show invoices and credit notes for the month. However, there is no format on what dates to use for the statements.

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The account summary is included at the top half of the statement, which contains the opening balance, invoiced amount, amount paid, and balance due.

The opening balance is the ‘total due’ amount from the statement sent out for the previous period. The period varies at different time interval, whether it’s monthly, quarterly, or yearly.

The invoiced amount is the money that a customer will pay for the goods or services that they received during the current period.

The amount paid is the money which the customer has already paid. It is subtracted from the total invoiced amount to get the current amount due.

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The balance due is the money that the customer is yet to pay you for products or services rendered.

What Is Statement Of Account?


INVOICE DETAILS
Date: This is the date on which the invoice or credit note was sent or will be sent to the customer

Details: The numbers which refer to the invoice or credit note issued in the given period. Even payments are allocated to reference numbers which are indicated in the cash register.

Transactions: This describes the type of transaction made by the customer.

Amount: The currency amount of the sales invoice or credit note sent to the customer. Credit notes are usually represented as a negative value because they cut the customer’s outstanding balance.

Payment: The payment column shows the payments the customer made during the month.

Balance due: This is a running tally of the amount the customer currently owes you.

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OTHER SECTIONS
The format for a statement of accounts varies from business to business. Here are some other information that can be included:

Remittance: Remittance is the amount of money the customer sends to the seller as a payment for the purchase made. By including the seller’s business name and address on a remittance coupon, it makes it easier for the customer to put it in an envelope and post it to the seller. The customer’s details are written on the right side so that the seller will know which customer has sent the remittance.

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Customer cut-off dates: Many sellers have a cut-off date for each month beyond which any invoices and credits are counted as part of the next consecutive month. Ideally, all invoices and credit notes should be added and the statement of accounts should be sent to the customer before the cut-off date.

HOW TO ISSUE A STATEMENT OF ACCOUNT
A statements of account can be issued by:

PAPER
Some companies still use this traditional way of posting statements especially in underdeveloped countries. This will involve printing the statement and sending it in the post to a specific address.

ELECTRONIC
Most businesses however now send statements by email. This reduces postage costs and the customer will receive the statement  instantly instantly in good shape rather than the next day through the post.

CONCLUSION
A statement of accounts has similar features to a bank statement, except that it is sent by a seller to a customer. It helps show mistakes in transaction records, track unwanted expenses, discover fraudulent activities, and prevent small billing or payment mistakes from blowing up. There is no specific format for Statement of accounts, they can vary based on the requirement of a business organization and the types of information that they want to include in the invoice for the customer.