What is a Billing Statement?

A billing statement is a listing of the transactions impacting an account during a specific period of time. Statements are typically sent to customers on a monthly basis, so that they can review and verify account activity. The format of a statement that relates to unpaid customer receivables usually contains a reminder to pay any unpaid amounts that have exceeded the payment terms assigned to a customer.

Advantages of a Billing Statement

The advantages of a billing statement are as follows:

Clear financial record. A billing statement provides customers with a detailed summary of their purchases, payments, and outstanding balances, helping them track their financial activity.
Improved cash flow for seller. Regularly sending billing statements ensures that customers are reminded of their obligations, leading to timely payments and better cash flow management.
Fewer payment disputes. Since billing statements clearly outline charges, due dates, and payments received, they help prevent misunderstandings or disputes over amounts owed.
Opportunity for additional communication. A billing statement can include special offers, reminders, or important company updates, improving customer engagement and loyalty.

Disadvantages of a Billing Statement

When billing statements are mailed, the seller incurs the cost of printing and postage. This may not represent much of a cost-benefit tradeoff if customers are not diligent in reviewing the statements.

The Difference Between a Billing Statement and an Invoice

A billing statement lists every transaction impacting a customer account during a period of time, while an invoice contains a request for payment in regard to a specific sale that was allowed by the seller on credit. The differences between the two documents are as follows:

Contents. A billing statement may contain a list of several invoices that were issued to the customer, while an invoice contains fewer items. In essence, an invoice is a subset of a billings statement.
Timing. An invoice may be issued at any time (usually right after a sale transaction has been completed), while a billing statement is usually issued at the end of the month.