Statement of account definition
/What is a Statement of Account?
A statement of account is a detailed report of the contents of an account. An example is a statement sent to a customer, showing billings to and payments from the customer during a specific time period, resulting in an ending balance. The purpose of the statement is to remind a customer of sales on credit that have not yet been paid to the seller. The statement is usually a printed document, but may also be sent electronically. A sample statement of account usually includes the following information:
The beginning total of unpaid invoices.
The invoice number, invoice date, and total amount of each invoice issued to the customer during the time period.
The credit number, credit date, and total amount of each miscellaneous credit issued to the customer during the time period.
The payment date and total amount of each payment received by the seller during the time period.
The net remaining balance of all transactions listed. This is the total amount payable to the seller.
A payment slip on the bottom of the page that can be torn off and used as a remittance back to the seller. The slip usually contains a mail-to address, the customer name, and a block in which to fill in the amount being paid.
There may also be a block on the statement, in which is noted the contact information for the seller's collections staff, in case the recipient wants to contact them to discuss the information on the statement.
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Statement of Account Time Buckets
The amount of invoices listed on the statement may be itemized into time buckets, so that the reader can easily determine which invoices are overdue for payment, and which are not yet due. The time buckets typically used are 0 to 30 days, 31-60 days, 61-90 days, and 90+ days. Depending on the accounting software, it may be possible to adjust the durations of these time buckets.
In rare cases, the presence of large credits on a statement of account may reveal that the seller owes money to the customer, in which case a payment or ongoing credit is arranged.
Advantages of the Statement of Account
A statement of account is used as a collection tool, reminding customers of the amounts they owe to the issuer. They are most effective when issued within an email with a payment link, so that customers can pay at once with a credit card.
Disadvantages of the Statement of Account
The utility of the statement of account is questionable, since it requires some accounting staff time to create, as well as postage costs, and may be ignored by recipients. It is also generally issued immediately after month-end, when it interferes with the monthly closing process.
Terms Similar to Statement of Account
A statement of account is also known as an account statement.