Statement vs invoice: What is the difference between them?

What is a statement?

A statement, also known as a statement of account, is a financial statement that summarizes all the transactions. It includes invoices, outstanding balances, payments received, any pending dues, and other account activities.

Therefore, a customer gets a clear idea of the account status and the unpaid amounts. Compared to an invoice, a billing statement is broader and includes details of multiple transactions.

Businesses usually send statements to their customers weekly, monthly, or yearly. This helps them get the account summary and payment reminder. Hence, the primary objective of the statement is to inform the customer about the transaction history and the due balance.

A typical statement includes the following information:

• Customer information
• Invoice number and date
• Statement period
• Payment received
• Outstanding balances
• Credit notes or other adjustments
• Total amount due

What is an invoice?

An invoice is a document that the seller sends to the buyer to request payment for products sold or services provided. It outlines line-item details, such as product or service descriptions, quantities, and unit prices.

Therefore, the purpose of an invoice is to request payment of the outstanding amount. An invoice is also useful for tracking payments and maintaining accurate financial records.

Unlike a statement, which summarizes multiple transactions over the period, an invoice includes only one transaction.

A typical invoice includes the following information:

• Invoice number
• Date of issue
• Due date
• Currency
• Customer name and contact information
• Business details or seller details
• PO number
• Line item description with unit price and quantity
• Taxes and discounts (if applicable)
• Total due amount
• Payment terms
• Additional notes
• Signature of issuer

Statement vs invoice: Key comparison

The major difference between a statement and an invoice is their purpose. A statement is a document that summarizes overall transactions, whereas an invoice is a document requesting payment.

The following table reflects the true information on the statement vs. the invoice:

Here is a real-life example demonstrating the invoice and statement difference.

Suppose a furniture manufacturer sells a piece of furniture to a regular customer. In the first sale, the customer purchased 4 sets of chairs; in the second sale, 2 beds. The manufacturer may issue separate invoices for both sales in the following way:

Now, when the manufacturer issues the statement, it will look as follows:

The total amount due per the invoice was $1,400. When the customer pays $1000, the outstanding balance is $400, as mentioned in the statement.

What are the similarities between an invoice and a statement?

So far, in the invoice vs statement section, we have covered the differences between statements and invoices. Let’s understand the similarities between them:

• Both statements and invoices are two important financial documents.
• Business owners and financial leaders use both documents to manage financial records.
• Both include customer details, company name, and due balances.
• Business professionals can share both documents via email.
• The invoice and statement cover the transaction-related details.

When to use an invoice vs. a statement?

Invoices and statements play an important role in the billing process. The use of an invoice and statement depends on your objective. Let’s understand the key uses of invoices and statements as follows:

An invoice is useful:

• When you have completed a sale or project and demand payment from the client.
• When you need to keep a record of transactions.
• To track the outstanding amount.
• To avoid payment disputes with documented transaction details.
• For managing the business cash flow.
• To record and report sales taxes accurately.

A statement is useful:

• When the customer has multiple invoices.
• To check the overall account activity in a summarized form.
• To remind the customer about the due payment.
• When multiple transactions need to be tracked in a single document.
• To maintain accurate accounting records.
• When there are ongoing sales and recurring invoices.

How do invoices and statements affect cash flow management?

Both invoices and statements manage your business cash flow in different ways.

Invoices

While sharing the invoice, businesses get timely payment. The details, such as the due date and late-payment fee terms, encourage clients to make payment. Therefore, it improves the cash flow. Business owners also get an idea of the expected payment and plan their finances accordingly.

Statements

Statements serve as payment reminders for customers. Businesses can quickly identify unpaid accounts. It set transparency, thereby helping both the business and customers to track the account status accurately.

Moon Invoice: All-in-one solution for statements and invoices

Moon Invoice, an AI-powered invoicing software, helps businesses streamline their billing. Its digitalization reduces the manual work and saves professionals time.

You can effortlessly create a digital invoice by using the ready-to-use templates. The software provides 66+ customizable templates. The template includes auto-calculation functionality that computes the total, tax, and discounts. You can easily send the invoice via WhatsApp or email. Additionally, you can mark the invoice as paid or unpaid to make it easier to track.

The system provides a complete overview of the customer account activity. You can maintain accurate transaction records and access them at any time. Whether you handle one client or multiple, you can efficiently manage your statements in one place.

You can easily analyze revenue, payments, net profit, overdue, expenditures, and overall financial performance using 15+ business reports.

With advanced features such as expense management, tracking, and recurring invoices, professionals can simplify their billing process. Ultimately, this enhances the business efficiency.

Final words

A statement and an invoice are two important parts of your billing process. However, you must use them for a separate purpose. Therefore, you must clearly understand the distinction between statements and invoices to track outstanding balances efficiently and improve billing accuracy. Moreover, you can win the billing game by using reputable invoicing software like Moon Invoice.

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