What Is a Statement of Account?

Statements of Account Explained in Less Than 4 Minutes

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A statement of account is issued to a client by a vendor, detailing the financial transactions between the business and the client during a specific time period. Also referred to as an “account statement,” it is typically issued on a monthly basis and may reflect a zero balance if no payment is due.

An account statement is not the same as an invoice; rather, it’s a report sent to a client that lists all the invoice amounts and payments during that period. Learn about how statements of account work, read a few examples, and discover the types of account statements business use.

Definition and Examples of a Statement of Account

A statement of account is sent to a client, usually on a monthly basis, by a vendor and lists the invoices and payment amounts during that specific period. It can also indicate any outstanding amounts due.

An account statement provides important information, including fees charged by the vendor, a list of services provided, money owed by the client, and deposits made to the account. Because an account statement shows payments made by the client, it can result in a positive or negative ending balance.

  • Alternate name: Account statement

A non-business example of a statement of account is a bank statement. It lists all the transactions that happened during a specific time period, typically one month, which includes payments received and made.

Although an account statement is usually sent electronically, it can be sent as a printed document to the client or customer’s physical address.

An account statement can be issued for any account type that has ongoing transactions, such as a bank account, credit card account, or insurance account.

How a Statement of Account Works and Why It’s Important

A statement of account acts as a helpful tool for vendors to remind clients about outstanding payments. This is important because timely payments by clients can improve a vendor’s cash flow and allow the company to spend money on the resources it needs to maintain the business.

An account statement is also important for clients because it allows them to accurately track their payments and spending. Payment reminders, with the help of account statements, can also help them save money by paying what is due immediately and avoiding any late fees.

There are different aspects to a statement of account, including:

  • The vendor’s name and contact details
  • The client’s name and contact details
  • The statement date
  • The client’s account number
  • The previous balance (carried forward from the previous statement)
  • All transactions (invoices and payments, each on its own line)

As an optional item, a statement of account can have a note to the client, indicating that this is not a bill but a statement.

Account statements are important to check the consistency of records for a client’s account, too. The vendor can use them to verify that a client has paid the amounts due to them, and if there are any missed payments, the vendor can send a payment reminder to the client.

If there are any double payments or charges captured in the system, you can review and verify all payments to ensure the accuracy of transactions. For clients who receive periodical invoices, a statement of account makes it easy to view all the invoices sent so that discrepancies can easily be rectified.

Keep monthly account statements for at least one year and statements related to your taxes for at least seven years. They can provide a record for tax-related transactions and provide proof of income from interest-bearing accounts.

Types of Account Statements

In addition to business-related scenarios, statements of account can include credit card statements, insurance account statements, and bank account statements.

Credit Card Statements

Credit card statements list all transactions cardholders make, including purchases at a point of sale, and these transactions are reflected as they happen. When the credit card holder pays the credit card debt, the funds reflect in the account.

At the end of the period, the card company sends out a credit card statement to the cardholder that shows all the transactions, the fees charged, and the balance.

Medical Account  Statements

If you have a balance with a hospital’s billing department, you can expect to receive monthly statements that show your outstanding balance, payments you’ve made, payment due, and, in some cases, pending insurance claims.

Key Takeaways

  • A statement of account is a summary of a client’s account activity over a specific time period which can be monthly, quarterly, or another defined period.
  • An account statement shows a summary of invoices issued and payments received.
  • Account statements can be generated for any type of account that contains ongoing transactions. Examples include insurance accounts, bank accounts, or credit card accounts.