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statement of account
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What are statements of account?

This article will explain what a statement of account is and why they are important to both customers and suppliers.

What is a statement of account?

A statement of accounts is a document that highlights all transactions that took place between you and a specific customer during a given time period. Business owners will generally send a statement of accounts to customers to remind them to pay any overdue balance for sales that took place on credit during that time.

They are also useful for the customer, not only to remind them to make the payment, but also to allow them to cross reference the invoices and credit notes with those on their own system. It could be that they have not received all the invoices on the statement, in which case they can request copies from the business to ensure that their own records will be accurate.

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When do I need to issue a statement of account?

This is down to each individual business to decide, however it is common for statements to be issued monthly. Many businesses operate monthly payment runs so by issuing statements shortly after the month end gives time for any queries to be resolved before the payment run.

What information should I put on a statement of account?

A statement of account should list all transactions between the two businesses including: 

  • invoices
  • credit notes
  • any payments on account which are yet to be allocated.

The most common layout businesses use is to have four columns of information showing:

  • date 
  • detail (invoice, credit note, payment on account etc)
  • reference (invoice number for example)  
  • amount (credit notes and payments to be shown as negative figures).

The statement should be as simple as possible – the simpler the statement the quicker you are likely to be paid!

The statement should be on company headed paper with details of the person to be contacted in case of a query. With most businesses now paying electronically it would also be useful to print the bank account number and sort code of the your bank on the statement along with the reference you would like them to use.

It is also useful to show at the bottom of the statement the total amounts due for payment, overdue and not yet due, along with your credit terms – 30 days from month end for example.

How can I issue a statement of account?

A statements of account can be issued by:

  • Paper

Some companies still use the traditional method of posting statements. This will involve printing the statement and sending it in the post.

  • Electronic

Most businesses however now send statements by email. This cuts out postage costs and means the customer will receive the statement instantly rather than the next day through the post.

Do I need to keep a copy of all statements of account?

It is important to keep a record of all statements sent and received. Your accountant may want to see these to allocate payments made or received.

Interactive tutorial: Recording income

The step-by-step guide takes you through:

  • Types of income 
  • Documents used when goods or services are sold
  • Different payment methods
  • VAT – including limits and registration.

Click on the Start button below to read more. 

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