Maintaining a clear line of communication with your clients is essential to building strong relationships and loyalty. These things largely contribute to success in your business. One tool that can help: a billing statement.
A billing statement — also called an account statement — is a document that lists all of a client’s charges over a given time. It shows your client how much they have been billed and when. Aside from invoicing (check out our free invoice template here), it's one of the most important tools for small business owners.
When setting out on your journey as a novice entrepreneur, you might have chosen to invest immediately in invoicing software. Alternatively, perhaps you created basic invoices manually in Microsoft Word or Excel. Still, recognizing how important invoicing is to your business and its image is what got you this far.
However, you may be overlooking another aspect of accounts that could help to streamline how and when you get paid and how easy it is for both you and your customers to access vital information.
By now, you know what invoices are and have maybe even created one using our invoice generator, but has it occurred to you to send a billing statement out to your clients?
How does a billing statement work?
Billing statements are an essential piece of communication, providing a borrower with the minimum monthly payment that they must pay to keep their account current. It also includes other important information, such as the transactions that occurred during the month, the total interest charged for the month, and any fees added to the balance by the credit issuer. In addition, it shows the closing statement balance, which can be paid off entirely by the borrower.
You might be aware of the definition usually used to define invoice vs. bill. As the service provider, you send an invoice, and your customer receives a bill.
So, where does a billing statement fit into the equation?
A billing statement is neither of these two things.
A billing or invoice statement, as it's sometimes known- is a crucial but straightforward report that you can use to help your customers stay organized and understand what they owe you.
It’s a valuable tool for you to be able to see what you’re billing your client at a glance, as well as the payments they’ve already made to you, all condensed into a single report.
A billing statement also allows you to remind your customers about any outstanding payments and their due date and help you and the customer keep a comprehensive record of their account activity.
One of the most vital aspects of being a business owner is invoice tracking and customer account management.
A billing statement is a great tool that will tell you immediately which invoices are outstanding or nearing their due date, thereby freeing up your time to focus on other parts of your business.
It’s important to remember that a billing statement isn’t the same as the statement you receive from your credit card company. What your credit card company sends is more like a combined statement and invoice in one.
You should be sending your invoices and statements separately, as they serve different functions.
What’s the difference between an invoice and a billing statement?
While your invoice is itemized, a billing statement is a general overview of transactions, including payments made and due.
As a general rule, you’ll be issuing your invoices right before or after the sale or service is completed, whereas a statement is can be issued regularly or on request. Although most companies issue their billing statements on a monthly basis, you’re able to adjust the regularity, depending on the nature of your business and the clients’ preferences.
Invoices are far more detailed, itemizing the product or service, shipping fees (if applicable), and sales taxes. A statement will only list transactions and payments, as opposed to the item description.
Lastly, when you send an invoice to your customer, it's to collect payment, whereas you send a billing statement to inform the client of past invoices, recorded payments, or even notify the client of non-payment.
Vital information to always include on your billing statements
Your billing statement isn’t just a list of the invoices issued throughout the month (or whichever date range you select). It can also serve as a subtle reminder of an outstanding balance or missing payment.
If your statement isn’t comprehensive or has missing or inaccurate information, you’re risking a delay in your payment.
It should always be clear, concise, and comprehensive, leaving no room for error or misunderstanding on the part of you or your customer. You should both be able to see the information at a glance.
Depending on your business and its needs, the sections may vary, but generally, you should have:
Date of billing cycle
This seems obvious, but your client should easily see the dates of the billing cycle. Whether you send the billing statement weekly, biweekly, or monthly, it should be immediately apparent what cycle of invoices is in front of them. This can also help you with your own record-keeping and filing.
You might also find it helpful to include a statement number, not to be confused with the invoice number.
Client’s previous balance
Allowing your customers to see the amount they owed you before making any payments makes it easier for them to confirm that the information they have aligns with what appears on their statement.
Invoice numbers and dates
Invoice dates help you ensure the invoices that appear on the statement fall within the selected billing cycle, while details like an invoice or statement number are primarily for your benefit. These will help you keep track of your invoices, and being able to look up an invoice number makes it easier to find in the event of a query.
As you receive your customer's payment, it's likely that you're already recording the payment and sending them a receipt. These payments will then appear on the billing statement as part of the activity summary.
Balance due and balance owed
Having the current or outstanding balance appear on the billing statement is crucial, particularly if the client has neglected to pay you on time. This particular field is a not-so-subtle reminder that the customer owes you money. The rolling balance at the bottom of the billing statement will tell the client that they haven’t paid you in a certain amount of days, something you can point out to them if you need to follow up on your billing statement with a phone call.
Payment due date
Another vital piece of information that needs to be on your billing statement is the date that you’re expecting payment, leaving no room for misunderstanding on either side.
How to generate and send a billing statement
If you’re already an Invoice2go customer, you can quickly generate a billing statement once you’ve started invoicing your customers using the app. The invoice information is stored and summarized in the statement when selecting the relevant dates.
The option to create and send the billing statement is found in the “Client” tab in the phone app and the website.
The “Statement” option is at the very top of the “Create” dropdown list.
You can select the relevant date range before you open the statement. Once the document has been generated and is open, you can print the PDF or send it to your client via email if you’re paperless.
The Invoice2go software allows you to customize your invoices, and you’ll notice that the billing statement is in the same design format, giving your business a professional and streamlined image.
The Invoice2go software will shave more than just a few minutes off the free time you set aside for your accounts; time that you could spend concentrating on other aspects of your business, spending time with your family, or catching up with friends.
If you’ve previously used Microsoft Excel or Word to create your invoices or billing statements, you’ll never look back once you’re using the features from Invoice2go.
Frequently asked questions
Invoice2go customers have access to the automatically generated billing statements in the software; however, there are no free billing statement templates available to non-customers at this time.
While there are free billing statement templates available in Microsoft Word and Excel, you might find yourself spending days at a time manually inputting data to create a billing statement.