A statement of account is a summary one seller sends to one customer, listing the invoices, credit memos, debit memos and payments posted to that customer’s account over a stated period, together with the amount owing at the start of the period and the balance still open at the end of it. It bills nothing new. Every document on it has already been issued and already been recorded, so the statement reports the account rather than adding to it. Statement of accounts is the same document under another name.
The phrase does other work in banking, where a bank that sends or makes available to a customer a statement of account showing payment of items for the account has to either return or make available the items paid, or put information in the statement sufficient to allow the customer reasonably to identify them (Uniform Commercial Code 4-406(a), enacted at Kan. Stat. Ann. 84-4-406(a)). That is the bank-statement sense of the phrase, a different document with its own duties attached to it.
The Two Formats
A statement of account comes in one of two shapes, and the choice changes what the customer can do with it.
An open-item statement lists every unpaid invoice individually, each with its own document number, date and amount, so what was owed from earlier periods appears as the invoices that make it up rather than as a single summarized figure. The customer can pay it invoice by invoice, and can tell you precisely which document is in dispute rather than withholding a lump sum.
A balance-forward statement carries a single figure for everything owed before the period began, then lists only the documents raised inside the period. It is shorter to read and harder to pay against, because a customer remitting against one brought-forward number is not telling you which invoice the money settles. Cash application, the work of matching an incoming payment to the invoices it pays, is where that shows up, and the controls around it sit in accounts receivable best practices.
What the Statement Is Built From
The statement is produced from one customer’s own account in the receivables subledger, not from the general ledger. The general ledger carries a single control account for everything customers owe, while the row-by-row detail behind it sits in the subsidiary ledger, and a statement is that one customer’s rows for a stated period. The figure it ends on is that customer’s share of accounts receivable.
Issuing one records nothing. The invoice, the credit memo, the debit memo and the cash receipt were each the recorded event, and the statement reprints what those postings left on the account. That is also why it is not the source document an entry is made from: the documents it lists are.
In a firm’s own billing it does two jobs at once. It is a collection instrument, because a customer who has lost an invoice cannot pay it and a monthly list is the cheapest way to put it back in front of them. It is also a reconciliation instrument, because it invites the other side to compare their record of the account against yours, and a misapplied payment or a credit that never arrived usually surfaces the first time somebody reads the same list from the other end.
A Statement Worked Through
Say a firm’s account for one client opens the month with a balance carried in from February, then takes two invoices, a credit memo and a payment.
the account for March
balance brought forward, March 1 8,400
invoice 1041, March 6 3,200
invoice 1052, March 19 1,750
credit memo 118, March 21 (400)
payment received, March 24 (5,900)
balance open at March 31 7,050The closing figure is the brought-forward balance plus both invoices, less the credit memo and the payment. On a balance-forward statement that is all the client sees. On an open-item statement the same account instead shows which invoices are still unpaid and by how much, which is the version a client with a disputed charge can actually act on.
Statement of Account vs Invoice
An invoice bills one transaction and creates a receivable. A statement bills nothing and creates nothing, because it reports what the invoices already put on the account.
The difference is written down where money turns on it. Under the federal prompt payment rule the information that constitutes a proper invoice is set out item by item, among it the name of the vendor, the invoice date, the government contract number or other authorization for delivery of the goods or services, the vendor’s invoice number, and the description, price and quantity of the goods and services rendered (5 CFR 1315.9(b)(1)). Those requirements attach to the invoice itself, not to a later summary of one, and which date a proper invoice then starts counting from is worked through in when a payment term starts counting.
Statement of Account vs Aging Report
Both list balances nobody has paid yet, and they are built for opposite readers. The statement goes outward to one customer and is sorted by document, so it answers what that customer owes and on which invoices. The accounts receivable aging report stays inside the firm, covers every customer at once, and is sorted by how long each balance has been outstanding, so it answers who gets chased first.
Common Questions
Pick the customer and the period, then pull that customer’s rows from the receivables subledger for those dates: the balance brought forward, every invoice, credit memo and debit memo raised in the period, every payment applied against it, and the balance left open. Decide open-item or balance-forward before you generate it, because that setting is what the customer will pay against. Put remittance details and a named contact on the face of it, since the whole point of sending one is to be answered.
Accountably places trained offshore accountants and tax preparers inside US CPA and EA firms, and a firm can put a block of its own receivables and billing work through a trial task before anything client facing depends on it.
