The difference between an invoice and a statement
/What is an Invoice?
An invoice is a document submitted to a customer, identifying a transaction for which the customer owes payment to the issuer. This document represents an asset of the issuer and a liability of the customer.
What is a Statement?
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.
Related AccountingTools Courses
Comparing an Invoice and a Statement
There are several key differences between an invoice and a statement, which are as follows:
The intent of an invoice is collect payment from the buyer for a specific sale, while a statement is more of a general notification of nonpayment.
An invoice provides more detailed information about a specific sale, such as the item description, item price, shipping charges, and sales taxes, while a statement only provides a grand total due for each invoice.
Invoices are issued whenever a sale has been completed, while statements are only issued at set intervals, such as at the end of the month.
The buyer records a payable when an invoice is received, but records no accounting transaction at all when a statement is received, since the statement is only informational in nature.
It can be unwise to treat a statement as an invoice and pay items listed on the statement, since it is possible that the buyer already paid for those items, but the payment has not yet been reflected in the seller's accounting system. A better alternative for the buyer is to make inquiries about any invoices that are listed on the statement, and obtain more detailed information before issuing a payment.
Credit Card Statements
There can be some confusion between the invoice and statement terms when dealing with credit card providers, since they issue a "statement" that is actually an invoice.