What Is a Statement of Account?
Statement of Account

When a customer has several invoices open with you at once, individual invoices get lost. A statement of account pulls them together: everything you invoiced, everything you credited, everything they paid, and the balance at the end. It is one of the simplest tools for getting paid, because it shows the customer, on a single page, exactly what is outstanding and what is overdue.

What a statement of account shows

Invoices increase the balance and appear in the debit column; payments and credit notes reduce it and appear in the credit column. The closing balance is what the customer owes on the statement date.

An aged balance on a statement

• Not yet due£1,220
• 1 to 30 days overdue£860
• 31 to 60 days overdue£900
• Over 60 days overdue£420

Statement, invoice and remittance compared

Why statements help you get paid

They catch lost invoices. A customer who never received an invoice sees it on the statement and asks for a copy.

They show what is overdue. Most statements split the balance by age: not yet due, 1 to 30 days overdue, 31 to 60, over 60. The overdue lines are what the customer's accounts team acts on.

They reconcile both sets of books. If the customer's records show a different balance, the statement surfaces the difference: a payment you have not received, a credit note they have not recorded, or an invoice in dispute.

They prompt payment runs. Many accounts teams pay from statements at month end, clearing everything due in one payment, often with a remittance advice.

How to prepare one

Most invoicing and accounting software produces statements automatically. If you prepare one by hand:

1. Start with the balance owed at the end of the previous statement.
2. List each invoice, credit note and payment in date order, with its reference and amount.
3. Keep a running balance.
4. Show the closing balance, split by age if you can.
5. Add your payment details and the reference to quote.
6. Date it, and send it to the customer's accounts payable address.

Ageing: the most useful part of a statement

An aged statement groups the balance by how long each invoice has been outstanding past its due date. It turns a single figure into a clear message: this much is fine, this much is late, this much is very late. For your own business, the same ageing of all customers together is your aged accounts receivable report, the best single view of who to chase first. Invoices over 60 days overdue deserve a phone call and, for business customers, a look at statutory interest; the late payment interest calculator works out what is due.

Statements and late payment

A statement is not a legal notice, but it is useful evidence that you told the customer what they owed and when. If a debt reaches a formal stage, a run of monthly statements showing the same overdue invoices supports your case. The guide on how to chase an unpaid invoice sets out the steps from reminders to a letter before action.

Statements and VAT

A statement is not a VAT invoice and a customer cannot reclaim VAT from it. Each invoice listed must stand on its own as a valid invoice or VAT invoice. If a statement shows a difference caused by a VAT error, correct the underlying invoice with a credit note or a further invoice, then let the next statement reflect it.

A worked example

A wholesaler supplies a café group on 30-day terms. At the end of March, the group has four open items: an invoice from January for £420, now 60 days overdue; one from February for £900, 31 days overdue; one from early March for £860, just overdue; and one from late March for £1,220, not yet due. The wholesaler's statement shows the £3,400 balance split into those four bands, with the two oldest invoices highlighted. The café group's accounts team, seeing the aged balance, pays the three overdue invoices in its next run and queries nothing, because every figure is already on a page they can check. Without the statement, the January invoice might have stayed forgotten for another month.

Statements for small businesses

A sole trader with a handful of customers may think statements are for big companies. They are not. Any customer who is sent more than one invoice a month, or who has ever paid late, benefits from a monthly statement. It takes minutes to produce from invoicing software and often saves several chasing emails. For customers who pay one invoice at a time and always on time, a statement adds little.

What to do when a customer's balance disagrees

If a customer says your statement is wrong, compare line by line. The usual causes are:

• a payment they made that you have not yet received or recorded
• a payment made to the wrong invoice or the wrong supplier
• a credit note you issued that they have not recorded, or one they expected that you have not issued
• an invoice they never received
• an invoice they dispute

Agree each difference in writing, fix the underlying documents, and let the next statement show the corrected balance. Never adjust a statement on its own to make the numbers agree; the statement must always follow the invoices, credit notes and payments.

Sending statements well

Timing matters. Send statements on the first working day of each month, covering the month just ended, so they arrive before customers' month-end payment runs. Send them to the accounts payable address, not only your day-to-day contact. Keep the covering email short: the balance, the amount overdue, and a request to pay the overdue invoices or tell you if anything is disputed. Attach copies of any overdue invoices, so the customer does not have to ask. And be consistent: a statement every month, without fail, teaches customers that you track what you are owed.

If a customer has nothing overdue, a statement is still worth sending when several invoices are open; it confirms both sides agree the balance. If a customer has settled everything, there is no need to send one.

Statements in construction and trades

Contractors and trades often work on accounts with regular customers: a builder with a merchant, a subcontractor with a main contractor, a plumber with a letting agent. Statements are especially useful there, because invoices, credits for returned materials, retentions and part payments pile up quickly. For subcontractors under CIS, remember that payments arrive net of CIS deductions; the statement should show the full invoice amounts, with the deduction recorded as tax already paid rather than as an unpaid balance, so the balance does not look wrong by 20 or 30 percent.

Statements, Making Tax Digital and e-invoicing

Statements are a management tool rather than a tax document, but they rely on the same records Making Tax Digital requires you to keep digitally: every invoice, credit note and payment. Keeping those records in one place means statements take seconds to produce. When VAT invoices move to e-invoicing from April 2029, the invoices behind a statement will increasingly arrive in the customer's system automatically, which should reduce the "we never received it" differences statements exist to catch.

Keeping statements

Keep a copy of each statement you send. They are a useful record of what customers were told they owed and when, which helps in disputes and supports your chasing record. They do not replace invoices as tax records, but they sit alongside them in your business records.

Related terms

For the rights that apply to overdue balances, see charging interest on late payments and late payment compensation; for setting due dates, see payment terms.

Statements summarise invoices identified by their invoice number, reduced by any credit note and settled by payments that often come with a remittance advice. Together, the balances across all customers make up your accounts receivable. For the steps to take on overdue balances, see how to chase an unpaid invoice.

A statement checklist

Before sending, check that the opening balance matches last month's closing balance, every invoice and credit note issued in the month is listed, every payment received is listed against the right invoices, the ageing is correct, and your payment details and the reference to quote are shown. If you use the invoice due date calculator to set due dates, the ageing follows automatically from them. Then send it, and diary a follow-up for anything over 30 days overdue. A statement that goes out on time every month is one of the cheapest ways to get paid faster.

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