An invoice is a document sent from a supplier to a buyer that accompanies a shipment of goods. It lists all the items included in the delivery along with the amount owed for them.
You send an invoice when you want someone to pay you for goods or services you provided. It is essentially a bill to the other company.
If you receive a bill, you’re receiving an invoice that someone else wants you to pay, for goods or services they rendered to you. An invoice is the legal or technical document for a bill.
A statement on the other hand is an up-to-date report on what buyers still owe vendors on account. It is the status of a customer’s account at a certain point in time.
For instance, bank statements are issued monthly, and list all the transactions – both credits (money added to the account) and debits (money taken away from the account to pay for goods and services purchased) that occur over the course of the month.
Differences in Intent
An invoice serves to ask a buyer for payment. The invoice also let the buyer know about the cost of each item that is included in a purchase order. It serves as the vendor’s communication on why the buyer owes a certain amount.
A statement is meant to compel a buyer to make a payment on their account.
The statement includes the most recent charges and notifies buyers of any amounts that are still owed on previous purchases. It covers invoice status for a given period of time, usually monthly, and is sent on a regular basis.
An invoice is a request for someone to pay you. A statement is the status of one or more invoices.
What’s on an Invoice?
The typical invoice includes A few elements related to the order it is 4. The invoice has a header with a title at the top along with vendor contact information, a customer name, and a customer number.
There is also an invoice number that is used for tracking purposes.
The invoice also includes the purchase date, product name, product number, quantity, and a per-unit cost.
Everything is itemized for each good that was ordered. At the bottom of the invoice, you’ll find a subtotal for everything that was purchased, a sales tax amount, and a final total.
The bottom of the invoice also includes information on payment terms as well as a payment address.
What’s on a Statement?
Generally speaking, statements aren’t usually as detailed as invoices. A statement shows the date of each transaction recorded during the statement period. Some companies only include unpaid amounts on their statement.
Others, however, show all transactions within the given statement period. The invoice number and total from each invoice are itemized on the statement.
The information enables the customer to match both paid and unpaid invoices on the statement to invoices and receipts. The statement also includes payment terms and information about how to make the payments.
Dates and Payments
Normally, invoices include the date your order was either processed or shipped along with a payment due date. Statements have a statement date which refers to the day the statement is finalized and sent to the buyer.
Buyers should routinely pay balances due when an invoice arrives instead of waiting for statements.
Statements are sometimes issued before payments are processed so by accidentally paying your invoices, you avoid confusion as to whether a balance has been paid when you receive a statement.
Why You Should Keep Both
Since the statement is a broad overview of your balance due, you’ll be able to see which invoices are listed as paid and which ones still have a balance due.
When you receive an invoice and make payment on it, mark it paid in your system and include the date. If you paid by credit card, keep your credit card statement on hand for proof of the payment transaction.
If you paid by cash, make sure you receive a sales receipt for proof of payment. If you paid by check, keep a copy of the check in your register, and keep your brand statement on hand for proof of payment.
By going back and looking at your invoices, you can compare them to the statement to ensure everything matches up.
If you find the statement indicates that you have not paid an invoice, but you have proof of payment, you can easily go back to the vendor with the necessary information so that they can mark the invoice paid.
The change will be indicated in the following statement.
Keeping the invoice on hand also allows you to make sure that everything you ordered is included and you are not being overcharged.
It’s important to remember that a statement amount is not always the current amount owed.
If you have a statement dated July 31st, it may indicate that you owe entire amounts from four invoices and a small amount from a v invoice.
However, it’s possible that on July 30th and on August 3rd, you paid the amount owed for two of the invoices listed on the statement, so the statement is not an accurate representation of the balance due on your account.
Because of this, your organization is wise to have a policy to make payments only from invoices and never from statements.
Following this policy answers you are not paying the same invoices twice. This ensures that your small business can keep a good cash flow, and makes bookkeeping much easier.
