Invoice vs. Invoice Statement: Comprehensive Guide w/ Examples

Invoice vs. Invoice Statement: Comprehensive Guide w/ Examples

As a business owner, you need to know how to differentiate between an invoice and an invoice statement.

Sometimes you will need to send your clients an invoice statement. And if you don’t know what exactly goes on an invoice statement, you might end up sending the wrong document.

Below, we’ll explain what goes on an invoice and what goes on an invoice statement. We’ll also cover the main differences between the two.

Let’s start with the invoice.

What is an Invoice?

An invoice is a document portraying the legal agreement between the vendor and the client for the services provided or the products purchased.

Issuing an invoice is crucial for any company, as it is a record of a transaction and thus necessary for accounting purposes.

There are many different types of invoices. Some of the most common ones are:

  • Freelance invoice. Freelancers use this type of invoice to make sure they get paid for the services they provide.
  • Small business invoice. Small businesses that want to track their revenue and support business growth use this type of invoice.
  • Credit invoice. Credit invoices are created for clients who want to either exchange an item or get a discount.
  • Deposit invoice. Deposit invoices are used when the vendor wants to get a portion of the payment before starting work.

When Should You Send Invoices?

If you want to know when you should send an invoice, the answer is simple. It depends on your business, type of services you offer, and the agreement you have with your client.

If you are in the construction industry for example, you might need to get a deposit ahead of time, so you can cover the cost of materials.

Alternatively, if you are a marketing agency, you might demand payment after the work is completed (at the end of the month).

Regardless of when you expect to be paid, you can always send the invoice as soon as you start working. Just make sure to add the correct due date on the invoice.

What Information Goes on an Invoice?

Now that you know what an invoice is, let’s go through all the crucial parts of any invoice.

  • Company details. Include the company name and a logo, as well as the details such as the email address, physical address, and phone number.
  • Client information. You should include the client's name, email address, physical address, and phone number here.
  • Tax ID. If you are located in the EU and you are invoicing another EU company, you’ll have to include both your and their VAT ID.
  • Invoice number and dates. An invoice number is a unique number that every invoice must have in order to be considered legal. As for the dates, you should include the invoice issue date as well as the invoice due date.
  • Service/product description. Make sure to go into detail about the service or product you are providing. Some of the things you can describe include what the service or product is about, the quantity if applicable, the expected date of delivery, and so on.
  • Total cost and taxes. This section serves as a summary of the charges. So, you can consider the expenses associated with carrying out the project, how much you want to get paid, what kind of taxes apply, etc.
  • Payment terms. Finally, you have to indicate the payment terms. This includes not only the list of payment options but also any additional information clients may need or want to know.

If manually entering all this data into either Word or Excel seems like a hassle to you, you can always use a free online invoice generator.

The process is simple! All you have to do is:

  1. Open our free online invoice template
  2. Enter all the essential information
  3. Preview the document
  4. Download and send it to the client

What is an Invoice Statement?

Now that we’ve covered everything there’s to know about invoices, let’s move on to the invoice statement.

An invoice statement is a report that shows the status of all invoices sent to a client over a period of time. Each invoice has a corresponding status (paid, overdue, money owed, etc) and therefore it clearly demonstrates whether a client still owes a vendor money or not.

An invoice is used to ask for payment by explaining why a certain amount is due. An invoice statement, on the other hand, is used for a different reason. It urges the client to pay because it lists all the charges on the account as well as the amounts that are still owed.

When Should You Send an Invoice Statement?

Usually, invoice statements are sent on a monthly basis.

Since it is a summary of the account activity, it is best to send one once a month, usually at the end of the month.

If you send it more often, the client might think it's spam or even get confused, which is not what you want, especially when it comes to payments.

What Information Goes on an Invoice Statement?

Now that you know what an invoice statement is and when it should be sent, we can move on to a list of the most important things that should be on an invoice statement.

  • Business information. In this section, you should list the company's name, physical address, email address, and phone number. For a more professional look, you can also add a logo.
  • Client details. Include things like the name, email address, physical address, and phone number of your client.
  • Statement date and number. The statement date is the date the document was sent out, and the statement number is a unique number that gives the document its legal weight.
  • Account summary. This section gives a detailed list of all the purchases and charges made on the account in the last month. Some choose to focus on the amounts that haven't been paid instead of all the transactions.
  • Payment terms. You should definitely include the payment terms, which should consist of the due dates and payment options. Make sure to include a few payment options so that your clients can easily pay you.

Key Differences Between Invoice and Statement

It is important to know the difference between an invoice and a statement if you want to know when to use each type of legal document. Some of the most important ways in which these two documents are different are:

  • The intent. While an invoice is used to request a payment, a statement’s purpose is to notify a client about a payment that needs to be made.
  • Document outline. An invoice includes everything related to the purchase. It contains the item's name, price, quantity, shipping costs, sales taxes, and other information. A statement, on the other hand, only shows how much is owed for each invoice.
  • The time of issuing. Once a sale goes through, an invoice gets issued. A statement, however, is only issued within a certain period of time. Most commonly, that period is once a month.
  • Nature of the process. When the client gets an invoice, they record an outstanding payment, but when they get a statement, they don't record anything because the statement is just for information.

Why Invoice Statements Are Important?

It might not be a surprise that sending out invoice statements is good for both parties.

As a business owner, you may make a lot of sales, which is why it's helpful to have an invoice statement. You can easily keep track of all the sales you've made for that month with this legal document. It can also help you navigate your cash flow and make plans to increase your revenue.

As for the client, an invoice statement serves as a reminder that they haven't paid yet. Clients can easily get caught up in their work or other daily tasks and forget that they need to make a payment. But with invoice statements, that won't be a problem anymore. They will also be able to see how much they spent that month, which will help them plan their finances and make even better financial decisions.

Key Takeaways

  • An invoice is a legal document that shows what the client has purchased. It is issued whenever the vendor wants to receive the payment.
  • An invoice includes information about the business, the client, the service or product purchased, the number and dates, as well as payment terms.
  • An invoice statement is a report that displays the transactions made within the client’s account during a certain period of time. Usually, it is issued once a month.
  • An invoice statement should contain business information, client details, statement date and number, account summary, and payment terms.
  • The biggest differences between an invoice and an invoice statement lie in the intent, document content, time of issuing, and nature of the process.

Invoice vs. Statement FAQ

#1. How do I create an invoice statement?

You can do one of two things.

First, you can use Word or Excel to enter all the information manually. But this option can take a lot of time and is often flawed.

If you are using some sort of accounting software, it can automatically create an income statement for you.

Alternatively, you can use a free online invoice generator. It will make the process easier and give you more time to work on other important things.

#2. What is the purpose of an invoice statement?

The purpose of an invoice statement is to urge the client to make a payment.

Since it is a report of account activity, it will allow the clients to see what they have yet to pay for.

It will also help them keep better track of their money because it will remind them of what they've spent in the last month.

#3. What comes first, invoice or statement?

An invoice is issued right when the purchase is made, while a statement is issued within a specific period. Usually, that period is at the end of the month.

But without a purchase or a charge, there is no need for a statement. So, practically speaking, an invoice would be the first thing issued, which would then be included in the statement.


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