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Remind customers about outstanding invoices and make sure you get paid on time by sending a statement of account.
Read on to find out when to send a statement of account, what goes in one, and how to keep your business accounting in order.
Late payment is unfortunately all too common for small businesses that have worked hard to deliver quality services and products to their customers. And according to the Federation of Small Businesses (FSB), 400,000 small firms could be forced to close this year because of late-paying customers.
This can be particularly tricky if you have customers who pay on credit, or you’re issuing multiple invoices to the same customer over a short period of time.
Here we’ll be looking at the statement of account meaning in a business finance context, and how issuing one could help reduce late payments from customers.
This isn’t to be confused with a confirmation statement, which is an annual report you need to file with Companies House if you’re a limited company, or a Self Assessment statement that shows income you’ve reported to HMRC.
Also known as a customer statement, a statement of account shows transactions between buyers and sellers.
You can produce ‘activity statements’ to show all payments and invoices for your customer. By setting a date range, you can quickly see sales invoices, payments, credit notes, and overpayments.
Alternatively, you can create ‘outstanding statements’ to show only unpaid invoices.
Small businesses don’t tend to send customer accounts unless a customer asks for one.
But if you think it would help your business accounting, you can send a customer statement monthly, quarterly, or annually.
If you work with suppliers and regular customers that pay on credit for example, then a statement of account can be useful to help keep track of bills that still need to be paid. It’s also useful if you’ve issued a number of invoices to a customer over a month and you want to remind them of what they owe you.
It’s important to note that a customer statement isn’t usually used for individual invoices. If a customer hasn’t paid you for one invoice, then make sure you send a late payment letter and have a read of our tips for preventing late payment.
A customer or account statement usually includes:
You can generate customer statements pretty easily if you use accounting software. The exact process depends on the tools you use, but once you’ve got the statement ready you’ll be able to print it or email it straight to your customer. To make your life easier, you can usually schedule these statements to be sent automatically.
If you don’t use accounting tools for your business then you might create a statement of account manually in Microsoft Excel or Google Sheets.
Alternatively you can speak to your accountant, if you have one.
Watch this step-by-step video to understand what information you need to include on an invoice.
Is a statement of account something you send to your customers? Let us know your experience in the comments section below.
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