What is a Statement of Account and How Do You Create One for Your Business?

A statement of account is an essential business document that summarizes all transactions between you and a customer over a specific period, primarily to outline outstanding payments. Using a professional statement of account template accelerates payment cycles, reduces administrative tasks, and strengthens your brand's credibility with clients. This guide provides a clear template and explains the key components for creating an effective statement.

What is the difference between a statement of account and a bank statement?

While both documents track financial transactions, they serve distinct purposes. A statement of account (or account statement) is a business-generated report sent to a customer. It itemizes invoices, payments, and credits, showing a running balance of what is owed. Its primary function is to facilitate accounts receivable management by providing a clear audit trail and politely reminding customers of pending payments.

In contrast, a bank statement is issued by a financial institution to an account holder. It summarizes all cash inflows and outflows for a bank account, helping businesses reconcile their books and monitor cash flow. Understanding this distinction is crucial for maintaining organized financial records.

What should you include in a statement of account template?

A well-structured template ensures clarity and professionalism. Based on our assessment experience, the most effective templates include the following critical sections, often formatted as a table for easy reading:

Essential components detailed:

• Header Details: Prominently display your company logo, name, and address alongside the customer’s information. This reinforces employer branding and ensures the document reaches the correct person.
• Transaction Table: This is the core of the statement. It should list each invoice date, a unique reference number, a description of goods or services, the original amount, any payments received, and the current amount due. A subtotal and total due provide a final, unambiguous figure.
• Payment Instructions: Specify the payment due date, accepted payment methods, and crucial remittance details like your bank account number and sort code. To avoid delays, instruct customers to include the statement reference number with their payment.

How can you format a statement of account effectively?

Professional formatting directly impacts how quickly you get paid. Utilize spreadsheet or accounting software to create a clean, organized layout with clear headings. Bolding key figures like the Total Due draws immediate attention. Including a brief, polite comment, such as "Thank you for your business," can enhance customer relations. Consistency is also vital; always generate statements on the same date each month (e.g., the last day of the month) to set clear expectations for your clients.

What are some best practices for managing statements?

Beyond the template itself, effective management of the process is key to healthy cash flow.

• Adhere to Customer Cut-off Dates: Some clients have specific accounting cycles. Aligning your statement issuance with their schedule can prevent payment delays.
• Automate Where Possible: Many accounting platforms can automate statement generation and delivery, saving significant time and reducing errors.
• Follow Up Proactively: If a payment is overdue, a polite follow-up email or phone call referencing the statement often resolves the issue quickly.

To ensure prompt payments and maintain professional client relationships, a clear and detailed statement of account is indispensable. The core steps are: using a consistent template, itemizing all transactions transparently, and providing foolproof payment instructions. By implementing these practices, you can streamline your billing process and improve your accounts receivable turnover.

Please note that none of the companies, institutions, or organisations mentioned in this article are affiliated with ok.com.