Invoices and statements are different types of transaction records. An invoice generally covers a single transaction, while a statement summarizes multiple transactions and offers a broader view of the account’s status. These documents serve different purposes and have different structures.

Below, we’ll discuss what you should know about each of these records and how they’re distinct.

What’s in this article?

• What is the difference between an invoice and a statement?
  
• When should you use an invoice vs. a statement?
  
• How to structure an invoice vs. a statement
  
• How invoices and statements impact cash flow management
  

What is the difference between an invoice and a statement?

An invoice and a statement are both financial documents but serve different purposes in business transactions. An invoice is a request for payment for specific goods or services rendered, while a statement is a summary of all account activity over a specific period.

An invoice is typically issued immediately after the goods or services are provided. It’s sent to the customer to notify them of the balance due. The invoice includes:

• A unique invoice number

• The date of issue

• A detailed list of items or services delivered

• The total amount due

• Relevant payment terms (e.g., due date, discounts for early payment)

A statement is typically sent periodically (e.g., monthly) to provide an overview of the account’s status. It’s sent to the customer to inform them of their overall account balance and often includes overdue amounts or items already paid. The statement includes:

• The opening balance at the start of the period

• A list of all invoices, payments, credits, and adjustments during the period

• The ending balance at the close of the period

When should you use an invoice vs. a statement?

The choice between an invoice and a statement depends on the situation and the information you need to communicate to the customer. Use an invoice for a single transaction or when you request payment for specific goods or services. Issue a statement to manage ongoing account relationships, summarize multiple transactions, or address outstanding balances. Consider the following example use cases:

• A plumber who’s provided a maintenance service sends an invoice after the work is completed.

• A utility company sends a monthly statement that shows the current balance and recent payments.

• A wholesaler sends a statement to a retailer that has several pending invoices.

Generally, you should use an invoice when:

• You’ve sold goods or services and need to inform the customer about what they owe for that transaction

• You need to provide itemized details about products or services provided

• You need to establish a legal record of the business transaction for legal or accounting purposes

You should use a statement when:

• You need to provide an account summary showing all transactions over a set time period

• You need to remind a customer of multiple unpaid invoices over a set period

• A customer needs to confirm the details of their account activity to ensure there are no discrepancies

How to structure an invoice vs. a statement

An invoice typically shows a single transaction and the payment that’s due for that transaction. A statement provides an overview of multiple transactions and the overall account balance. Here’s how to structure each document.

Invoice

Header

• Your business name, logo, and contact information

• Title that includes the word “Invoice”

• Invoice number

• Date issued

Customer information

• Customer’s name and contact details

• Customer’s billing address (and shipping address, if applicable)

Transaction details

• Itemized list of goods or services provided

• Quantity, unit price, and total price for each item or service

• Subtotal, taxes, discounts, and total amount due

Payment terms

• Payment due date

• Accepted payment methods (e.g., bank transfer, credit card)

• Any penalties for late payments or discounts for early payments

Notes or additional information

• Optional section for messages such as, “Thank you for your business,” or additional instructions
  

Footer

• Contact details for queries or issues with the invoice
  

Statement

Header

• Your business name, logo, and contact information

• Title that includes the word “Statement”

• End date of the statement period

Customer information

• Customer’s name and account number

• Customer’s billing address

Account summary

• Opening balance (the amount owed at the beginning of the period)

• List of transactions, including:

  • Invoice numbers, dates, and amounts
    
  • Any payments received
    
  • Any credits or adjustments
    

• Ending balance (the amount owed at the close of the period)

Outstanding invoices

• Optional section listing all unpaid invoices with their due dates
  

Payment instructions

• How and where the customer should make payments
  

Notes or additional information

• Optional section for messages about overdue balances, upcoming deadlines, or account maintenance reminders
  

How invoices and statements impact cash flow management

Invoices and statements can help your business manage cash flow.

Invoices are how you let customers know what they owe you and how you formally request payment. They set payment terms such as due dates, allowing you to dictate and predict when that payment will arrive. Invoices are also legal proof that someone owes you money, which creates a safety net to help you secure payment if the customer disputes a charge or forgets to pay.

Statements can show customers how many overdue invoices they have and the total balance on their accounts. Statements can help customers settle all unpaid balances at once and remind them to make any missed payments. They create transparency by detailing each charge that goes into a total unpaid balance, and they demonstrate to customers that you’re tracking charges to their accounts and expecting payment.

To encourage payment through invoices and statements, follow these tips:

• Send invoices as soon as the transaction is complete, then track overdue payments and use statements as reminders.

• Include clear terms on when and how to pay invoices so customers know exactly what to do next.

• Use software to consistently send invoices and statements without requiring more manual effort.

• Add late fees to invoices to discourage delayed payments.