Statement Of Account – Customers Statements, Example and Template

Are you struggling to keep track of customer invoices and payments? Do you find yourself chasing down overdue payments or spending hours reconciling accounts? Many small businesses face these challenges. The good news is that a simple solution can make a big difference: the statement of account.

If you use a manual accounting system or Excel, we have developed a free statement of account template you can download.

What is an Account Statement?

An account statement shows a summary of a customer’s financial transactions with a specific firm, detailing the customer’s name, account number, transaction dates, and outstanding balances. It’s a snapshot of the customer’s account activity, showing all purchases, payments, credits, and any outstanding balance.

Think of it as a simplified version of your credit card statement. It clearly outlines your spending, payments, and outstanding balances.

 

Why is a Statement of Account Important

Statements of account are essential for maintaining clear and healthy financial relationships between businesses and their customers. Here’s why they are so important:

For Businesses:

  • Improved Cash Flow: Statements help you track outstanding invoices and identify overdue payments, allowing you to take timely action and improve your cash flow.
  • Reduced Debts: Statements regularly remind people of their debts, encouraging prompt payment and minimising the risk of bad debt.
  • Stronger Customer Relationships: Clear communication about payment expectations builds trust and fosters better customer relationships.
  • Efficient Record Keeping: Statements serve as organised records of all transactions, simplifying accounting and reconciliation processes.
  • Dispute Resolution: In case of discrepancies, a statement of account provides a documented history of transactions to resolve any disagreements quickly.
  • Professionalism: Sending regular statements demonstrates professionalism and a commitment to organised financial management.
  • Business Owner Benefits: For a business owner, statements of account are crucial for tracking payments, managing cash flow, and maintaining clear communication with customers. Automated processes can save time and enhance overall operational efficiency.

For Customers:

  • Transparency: Customers have a clear record of their purchases, payments, and outstanding balances.
  • Budgeting and Planning: Statements help customers track their spending and plan their finances effectively.
  • Error Detection: Customers can quickly identify any discrepancies or errors in billing.
  • Financial Management: Statements contribute to better financial organisation and control for customers.

In short, statements of account are a win-win for businesses and customers. They promote transparency, accountability, and healthy financial relationships.

What is Included in a Statement of Account? Outstanding Payments

Here’s what a typical statement of account includes:

  • Billing period: The statement’s date range (e.g., November 1st to November 30th).
  • Opening balance: The amount owed at the beginning of the billing period.
  • Invoice numbers and dates: A list of all invoices issued during the period.
  • Transaction details: A breakdown of all purchases, payments, and credits applied to the account.
  • Closing balance: The amount owed at the end of the billing period.
  • Credit terms: Any agreed-upon payment terms (e.g., net 30 days).
  • Account summary: A concise overview of the financial activities related to the account, including the opening balance, invoiced amount, amount paid, and balance due.

Statements of account are essential for both businesses and customers because they provide a clear and concise record of their financial relationship.

It is essential to ensure that you put on all your contact details so if they have a problem, they know where to get in touch. Include the Business name, address, telephone number, email address and any other contact details that you may have.

A customer will use a statement to check that the invoices and credit notes in their accounting system match the details on their system.

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When to Send a Customer Statement

A customer statement should be sent to customers regularly, typically monthly, quarterly, or annually, depending on the business’s needs and preferences. Regularly sending a customer statement helps remind customers about outstanding invoices and encourages timely payments.

Some common scenarios where a customer statement should be sent include:

  • Outstanding Balance: When a customer has an outstanding balance that needs to be paid, a statement serves as a gentle reminder.
  • Multiple Invoices: If a customer has multiple unpaid invoices, a consolidated statement can help them keep track of all the transactions.
  • Credit Note Application: When a customer has a credit note that needs to be applied to their account, a statement can clarify how the credit has been used.
  • Payment Confirmation: After a customer makes a payment, sending a statement can confirm receipt and update them on their current account status.

By sending customer statements regularly, businesses can maintain clear communication, reduce the risk of unpaid invoices, and foster better financial relationships with their customers.

Some businesses only pay when they have an account statement and can reconcile outstanding invoices.

Benefits of Using a Statement of Account

Using a statement of account can provide several significant benefits to businesses:

  • Improved Cash Flow: Regularly sending customer statements encourages customers to pay their outstanding invoices on time, significantly improving cash flow. Knowing what is owed helps businesses plan and manage their finances more effectively.
  • Reduced Late Payments: Customer statements regularly remind of outstanding balances, reducing the likelihood of late payments. This proactive approach helps maintain a steady inflow of cash.
  • Increased Transparency: Customer statements provide a clear breakdown of all transactions, including sales invoices, payments, and credits. This transparency builds trust between businesses and their customers, as both parties clearly understand the account status.
  • Simplified Accounting: Customer statements offer a summarised view of all transactions, making tracking and managing accounts easier. This simplification can save time and reduce errors in the accounting process.

By leveraging customer statements, businesses can enhance their financial management, ensure timely payments, and build stronger customer relationships.

Best Practices For Customer Statements

Statements of account can be powerful tools for small businesses, but only when used effectively. Here are some best practices to maximise their benefits:

  • Consistent Sending: Establish a regular schedule for generating and sending statements. Monthly is common, but weekly or bi-weekly might be necessary for businesses with high transaction volumes or short payment terms.
  • Clarity is Key: Keep your statements clear, concise, and easy to understand.
  • Detailed Transactions: Include a detailed breakdown of all transactions within the statement period. This should include invoice numbers, dates, descriptions of services or goods, payments received, any credits applied, and ongoing transactions.
  • Multiple Payment Options: Offer various payment methods to make it easier for customers to pay promptly.
  • Timely Follow-Up: Don’t hesitate to follow up on overdue payments.
  • Accurate Records: Maintaining accurate and up-to-date records is crucial for generating accurate statements.
  • Professional Design: While the content is key, a professional design adds credibility and reinforces your brand image.
  • Go Digital: Consider sending statements electronically to save on printing and postage costs.

Some businesses will only pay their account after they have received a statement. It can be a delay tactic to make a payment, but it also ensures their records are correct and they do not have to issue a second payment for missing invoices.

Common Mistakes to Avoid

When creating and sending customer statements, there are several common mistakes to avoid to ensure they are effective and accurate:

  • Inaccurate Information: Double-check all information, including customer names, addresses, and account balances, to ensure accuracy. Errors can lead to confusion and delay payments.
  • Missing Information: Ensure that all relevant information is included, such as sales invoices, payments, and credits. A comprehensive breakdown of all transactions provides clarity and helps avoid disputes.
  • Poor Formatting: Use a clear and concise format that is easy to read and understand. A well-organised statement enhances readability and ensures that customers can quickly grasp their account status.
  • Late Sending: Send customer statements on a regular basis, as agreed upon with the customer. Timely statements help avoid late payments and improve cash flow.

By avoiding these common mistakes, businesses can ensure that their customer statements are accurate, informative, and effective in encouraging customers to pay their outstanding invoices on time.

Account Statements and Technology

In today’s digital age, technology offers fantastic opportunities to streamline the creation, delivery, and management of statements of account. Here’s how small businesses can leverage technology to their advantage:

1. Use Accounting Software:

  • Automation: Accounting software like Xero, QuickBooks, or Zoho Books automates statement generation, eliminating manual data entry and reducing errors.
  • Customisation: Tailor your statements with your logo, branding, and preferred layout for a professional look.
  • Scheduled Sending: Set up automatic email delivery of statements regularly.
  • Online Payment Integration: Customers can pay invoices directly from their statements through integrated online payment gateways. Remember, payment gateways will incur a fee.
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2. Explore Cloud-Based Solutions:

  • Accessibility: Cloud-based accounting software allows you to access and manage your statements from anywhere with an internet connection.
  • Real-time Updates: Track payments and account activity in real-time for up-to-date information.
  • Collaboration: Easily share statements with your accountant or team members for seamless collaboration.

3. Utilise Statement Management Tools:

  • Customer Portals: Provide customers with secure online access to their statements, invoices, and payment history.
  • Automated Reminders: Send automatic email or SMS reminders for upcoming payments or overdue invoices.
  • Data Analysis: Generate reports and analyse customer payment patterns to identify trends and improve your credit control processes.

Benefits of Streamlining with Technology:

  • Time Savings: Automate repetitive tasks and save time for other important business activities.
  • Reduced Errors: Minimise manual errors associated with data entry and calculations.
  • Improved Efficiency: Streamline your accounting processes and improve overall productivity.
  • Enhanced Customer Experience: Provide customers with convenient online access and payment options.
  • Better Financial Control: Gain real-time insights into your cash flow and outstanding payments.

A bank statement details all transactions in a bank account over a period, providing a comprehensive view of all financial activities. In contrast, a statement of account summarises the transactions between a seller and customer, offering crucial information for billing and tracking payments. By understanding these differences, businesses can better manage their financial records and improve their billing processes.

Statement of Account Template

statement of account template

If you are using a manual system, we have created a statement of account template, which is free to download.

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Features of our template:

  • The brand with your logo
  • Enter all your business contact information
  • List all the sales invoices and credit notes outstanding
  • Automatically totals the amount outstanding
  • If the customer ticks the invoice paid, it will total amount up
  • Remittance advice
  • Payment details

Statement of Account Example

Below is an example of the template in use.

Customer Statement of Account Template

Statement of Account – Remittance Advice

Most Statements include remittance advice. It can be detached and sent back with payment. It is an easy way to advise which invoices are paid and track unpaid sales invoices. The customer will either pay the amount in full or may mark the items paid. Most customers will send their remittance advice when payment is made using their accounting system.

14-day Letter

If payment is overdue and you have tried to contact the customer and provided a statement of account and a letter, the next step is to issue a 14-day debt collection letter. Attach a copy of their statement to the letter, or list the invoices and credit notes in the letter. It will make sure that they have all the details.

If payment is not made after 14 days, following through with the collection in the courts is best. You do not have to pay someone to complete it, as you can do it directly with Money claim online. The service is easy to use and provides full guides on how to use it. You can also claim for court fees and interest.

Statement of Account Overview

  • Complete at least once per month
  • Accounts systems can automate sending statements.
  • Include all invoices/credit notes
  • Include where to make payments
  • Brand your statement

A basic debt collection letter template is provided to download. It is also worth reading our guide on credit control.