A billing statement is a record of charges, payments, and any remaining balance a customer has over a given period (e.g., monthly, quarterly). While it shares similarities with an invoice, it’s typically less about requesting payment for a single product or service, and more about summarizing all financial activity within a certain window. Every company has a different template for billing statements based on various factors—from how it charges fees to when those fees are due. But the core principles are the same: make the statement transparent, keep it well organized, and send it on a predictable schedule.

Below, we’ll explain why billing statements are important, how to create one, and common mistakes to avoid.

What’s in this article?

• What is a billing statement, and why is it important?
  
• How do billing statements differ from invoices?
  
• What should a billing statement include?
  
• How do you create a billing statement?
  
• How does Stripe simplify the process of generating billing statements?
  
• What are common mistakes to avoid in billing statements?
  

What is a billing statement, and why is it important?

A billing statement is a record of a customer’s financial activity with your company over a set period—often a month, but it could be a quarter or year if that fits your business model. It includes every fee, payment, and outstanding balance for the time frame.

An effective billing statement gives customers insight into their spending, helps them track upcoming due dates, and clarifies what’s already been paid. A thorough statement can help reduce disputes by showing clients every charge and payment in one place. It can also help you keep a friendly relationship with customers. Instead of scrambling to answer where each fee came from, you can simply refer the customer to the statement.

On the internal side, statements simplify your bookkeeping. They create a paper (or digital) trail for reference later. If charges ever need revisiting (e.g., if a client has a question about a payment made three months ago), you can pull up the statement and quickly see the details.

How do billing statements differ from invoices?

Billing statements and invoices share similarities, but they ultimately serve different purposes. An invoice is a reminder that states what you owe for a specific product or service, and it is often linked to a one-time sale or project. However, a billing statement is more like a summary of a customer’s account activity over a stretch of time. It might show multiple charges, plus partial payments, credits, and any leftover amounts. Instead of requesting payment for a single transaction, a billing statement shows changes in a running balance.

In more detail, invoices and billing statements differ in the following ways:

• Timing: Invoices are usually sent at the end of a project or when a product ships, while statements are sent on a regular schedule (e.g., monthly, quarterly).

• Scope: An invoice is about a specific transaction or set of transactions, while a statement covers everything that happened on an account in a given period.

• Purpose: An invoice gives a direction, such as, “Pay for X.” Meanwhile, a statement gives a summary, saying, “Here’s what happened on your account this period, and here’s any amount you still owe.”

Many businesses use both. They send invoices whenever a one-time charge occurs, as well as a regular statement that includes that invoice in the itemized list of charges.

What should a billing statement include?

Crafting a billing statement requires a thoughtful arrangement of certain key elements that help customers quickly see how much they owe and why. These elements ensure customers won’t have to guess which charges are new, or whether you received their last payments. Below are the items you’ll want to include:

• Account or customer details: The individual’s name (or business name), account number, and contact information

• Statement date range: The period the statement covers

• Previous balance: Any balance that existed at the end of the previous statement cycle

• Payments received: All payments and credits applied during the statement period, along with their dates and amounts

• New charges or fees: All transactions that happened during the statement window, including purchases, subscriptions, service fees, interest, and anything else that was added to the account

• Adjustments or credits: Any refunds or corrected charges included in the time period

• Total amount due: A summary of the new balance at the end of the statement cycle, along with the due date

• Payment instructions: All payment methods you accept and any direct payment links or instructions for how to make payment via mail or phone, if applicable

• Contact information: Your phone number or email address, so customers can contact you if they spot a mistake or need more information

How do you create a billing statement?

Good recordkeeping is necessary for creating a billing statement. You need reliable data about each charge, payment, and adjustment in a customer’s account. Below is a step-by-step approach that can work well for many businesses.

• Gather transaction data: You’ll want a precise log of everything that happened in a billing cycle. That might be found in your accounting software, a spreadsheet, or a specialized billing platform. Confirm that the dates align with your billing cycle, and don’t include any charges from previous periods.

• Create or use a template: You can design your own template or find one online. The main goal is to keep it organized, with logical sections for each component (e.g., payments, charges). Some rely on a word processor, while others might prefer spreadsheet-based forms. Automated software can also generate statements with minimal effort.

• Organize charges and credits: Separate “New charges” from “Payments or credits.” Doing so will help customers see what’s new at a glance. List each item with a date and a short description (e.g., “Monthly membership fee for August”). Additionally, make sure to include a unique ID or reference for a transaction.

• Calculate the balance: Take the previous balance, subtract any payments, and add new charges. What’s left is the total amount due. Ensure you double-check these calculations. Even a minor math error could throw off your calculations and prompt support requests.

• Make the due date clear: Make sure that the due date stands out. If there’s a late fee for missing it, clarify that as well. Transparency will go a long way in maintaining customer relationships.

• Include payment instructions: People prefer to pay in various ways—credit card, bank transfer, check, or cash for some businesses. If you have an online portal, offer a direct payment link. If checks are still part of your operation, provide the mailing address. Let customers know whom to contact if they have special payment needs.

• Review and send: Review everything a final time. Check names, amounts, dates, and any account IDs. Then, deliver the statement—whether it’s by email, mail, or a client portal. Keep a copy for yourself, either by saving a PDF or by storing it digitally in your billing system.

How does Stripe simplify the process of generating billing statements?

Stripe can automate much of the process to generate billing statements. You can either use its application programming interfaces (APIs) to customize workflows and integrate billing into your own system, or use the Dashboard if you prefer not to write code. Whether you’re running subscriptions, charging per use, or sending one-off invoices, Stripe allows you to set your own billing rules (e.g., pricing tiers, discounts). It will automatically calculate what your customer owes and include the amount on professional, branded invoices.

Stripe can handle tax calculations, prorated charges, and currency conversions for international customers, which saves time and reduces the risk of manual error. It can also create billing statements in more than 25 languages to serve international clients.

What are common mistakes to avoid in billing statements?

When you manage billing details effectively, your statements can become helpful guides rather than points of contention. Customers can understand them and pay promptly if there’s a balance due. But even if you’re well-versed in accounting, it can be easy to make billing mistakes that might lead to confusion and late payments.

Here are some common errors to avoid:

• Confusing layouts: Cramming everything into a single block of text makes it challenging for customers to understand what they’re being charged for. Instead, separate payments, new charges, and the current total. If the statement is digital, consider a layout that adjusts well to mobile devices.

• Missing due dates: Some businesses might assume customers will know the standard payment window, which is risky. Emphasize the due date every time you send a statement.

• Vague descriptions: Labeling everything a “Fee” won’t be very helpful for a customer’s understanding. If the charge is for a “Membership renewal,” make sure to label it as such. If the charge is for something more detailed, such as an overage charge, make sure that’s clear; for example, you could say “Overage charge for exceeding plan limit.” Customers are less likely to question or dispute charges when they can see exactly what happened.

• Typos and calculation errors: It can take only one small mistake to lose a client’s trust. If someone sees a charge for $300 instead of $30, or if a payment they made last week is missing, they’ll worry about the accuracy of the entire statement. Double-check your math, or rely on automated systems that cross-verify the numbers.

• Omitted payment instructions: Always clarify how to pay, even if you’ve mentioned it before. This will prevent customers from having to hunt for old emails or payment portal links, and you’ll likely see fewer missed deadlines.

• No clear contact information: If a customer has a question, and you don’t provide an obvious email or phone number, they might decide to hold off on paying while they search your site for help. Make it simple to contact you. A short line that says, “Questions? Email us at [Address],” can reduce confusion.

• Late delivery dates: Send your bills as soon as the statement cycle ends. If your billing cycle ends on the 30th of every month, sending the statement on the 15th of the following month can cause payment issues. Customers might have incurred more charges in that half-month gap, or they might have already paid something you haven’t reflected in the statement. Aim for a consistent schedule.