How do you bill your customer? Invoice or Statement?

For many inexperienced small business owners, accounting is little more than a means of recording and storing data that, while necessary, does not represent its own fully-fledged part of the business itself.

Unfortunately, this is simply not the case, as accounting can really direct the growth of a business, as it tends to determine the cash flow, thereby controlling the options available to a business’ chief decision maker.

As a result, accounting is a substantial and important part of any business. However, even if you do acknowledge this, it is not uncommon for business owners to cling to tried-and-tested methods of managing their accounts, regardless of whether or not these methods are the most effective means of running their bookkeeping and accounts. One prevalent example of this phenomenon can be highlighted with the difference between a statement and an invoice. While many traditional accounting systems rely on the former, newer, more efficient accounting systems have found that invoicing often represents the better alternative. This is because many find that invoicing better facilitates payments from clients, so that a business can continue to operate with reliable incomings.

What’s the difference between a statement and an invoice?

If you’re unsure about the difference between a statement and invoice, it is perhaps best to consider it in terms of time.

A statement usually operates by combining the expenses accrued over the previous monthly period and presenting them to the payee in one lump sum.

Invoices, on the other hand, are generated as soon as costs are incurred, and can be automatically sent off to be paid at the client’s convenience.

Invoices tend to be simpler in format, and communicate the urgency of payment, whilst keeping payment options clear and as headache-free as possible, further increasing the likelihood of prompt payment.

What are the downsides of statements?

Given their relative differences, statements often fall short of invoicing procedures in a number of ways, among them:

• They lack clear due dates
• Given their scope, they tend to include excessive quantities of information that can confuse payees
• They are sent out infrequently, which increases the risk of them being forgotten, and thus, not paid
• They do not provoke immediate resolution, as they are sent out again and again, thereby leaving payees happy to delay payment

What are the benefits of invoices?

In contrast, invoicing comes with its own set of benefits simply not available to those who insist on continuing to use statements:

• They can be sent and paid with minimal fuss
• They are simpler, and clearer for the recipient to understand
• They have clear due dates

They can be automated with online accounting systems, complete with email reminders