Statements of account
Statements of Account are prepared by most businesses that provide goods or services to customers on credit terms. They are usually prepared by suppliers each month and are then sent to customers. A statement of account provides a breakdown of the amount the supplier calculates they are owed by the customer.
Statements of account are useful as:
- They provide customers with a reminder of the amount they owe and therefore increase the likelihood that they will pay
- They make it easy for the customers to make payment as they will include details of when and how payment should be made
- They enable customers to check whether the amount demanded by the supplier agrees to their own records
Statements of account can vary in layout and content but will almost invariably include:
- Details and references of both the supplier and customer
- The date the statement was made up to
- The amount outstanding at the start and end of the period
- The gross amounts from all invoices and credit notes issued to the customer over the period
- Payments received from the customer during the period (as well as any refunds made to the customer)
- Any other sorts of transactions that affect the amount owed to the supplier
Remittance advice slips
A Remittance Advice Slip is a form that businesses send with their payments to their credit suppliers. They provide all the details required to ensure that the supplier is able to record the amount paid against the correct customer and the correct invoices and thereby reducing the risk that a payment will be wrongly allocated, say against the wrong customer’s account.
A remittance advice slip can be in paper form (which is sent together with a cheque or cash) or in electronic form which will be sent to the supplier at the same time as an online or electronic transfer.
Many suppliers will include a remittance advice slip with its statements of account. Again, this makes it easier for customers to pay amounts outstanding and therefore makes it more likely that payment will be made.
A remittance advice slip will include details and references of both supplier and customer, together with the date of payment, the amount being paid and a breakdown of the amount (i.e. the invoices and credit notes that have been included in the amount). Where payment is made online or electronically, it will also provide details of the bank account to which the money has been paid.