What Is an Account Statement?
An account statement, also known as a billing statement, is a detailed report of the contents of an account. This report provides information on the client’s account activity that occurred during the last 30 days. Account statements are used to keep track of financial activities by individuals or businesses.
The most common are account balances from checking, savings, and brokerage accounts. Credit card statements are also considered account statements. These account statements show expenditures and other financial information for a specific period.
Understanding Account Statements
An Account Statement details your account history from when you opened the account to the present time. For example, the type of account, amount of debt, balance, and contact information for the owner. It helps customers determine whether certain checks or statements are pending or whether a purchase has been made on their account, all so that they can make better decisions. To understand account statements, it is helpful to think about a bank’s cash deposit statements from a consumer’s perspective.
In all cases, an account statement shows the past due amount plus any follow-up activity on the account to show customers that their funds are available. Even though not all banks send monthly statements, some do send them on a more regular basis, so keep an eye out for those if you’re frequently being charged interest or fees.
Any utility service provider, including water, gas, and electricity, will send out an account statement to their customers every month. These statements detail any credit or debit made to the customer’s account for the previous month, as well as any fees that may be associated with maintaining a service. Depending on the type of account, for example, an interest-bearing account or a noninterest-bearing account, you may be charged regular fees that would apply even if the account is “empty.” Things like taxes and services charges may be included in the price.
An effective account statement contains three elements:
- reminders that a customer has receipts from previous transactions and current balances outstanding;
- reminders that bills are due and payments due;
- any applicable fees or interest charges;
- and positive news to encourage customers to become habitually good business citizens.
It also includes important information to companies such as the borrower’s name, amount owing, balance due, due date, due date extension, due date penalty, and description of disputed payment.
The purpose of the statement is to remind a customer of sales on credit that have not yet been paid to the seller. To help identify bad debts, the statement is often used to show percent discounts off what it would cost if the debt were paid later. For example, a negative balance on a credit card might have an upper limit to justify charging what the actual cost would be if not paid now. This approach can be especially useful if financing is difficult.
How Account Statements Are Used?
Account statements should be examined closely for errors. The more information on the statement, the better. For example, a credit card statement will show any fees or interest accrued during that billing cycle. This allows the consumer to make accurate budget decisions for purchases. With a credit or loan statement, all the information you need to make informed financial decisions is at your fingertips. You’ll always know exactly what you owe, what fees may apply, and your current interest rate.
Due dates and interest rates all help you track your spending and make adjustments where needed. Alerts and warnings will also be issued to you when changes are being made to your account that you didn’t authorize. These statements may also provide customers with financial information such as their credit score.
Red Flags on Account Statements
Red flags on your account statement might mean someone stole your credit or debit card or that identity thief gained access to your account. Anomalies in your credit report or account statements may indicate that someone has committed fraud against you.
Account-holders will no longer have to worry about such charges; they should easily dispute them and file a claim if they did not make the purchases to reclaim their money. Account-holders who review their statements as they come in will be able to catch these red flags before becoming a financial disaster. They will also learn how much money is already spent on products they may forget about. This is a good financial habit that will ultimately save time, effort, and money.
Components of an Account Statement
An account statement is an itemized list of the transactions between a business and a customer. The statement should provide the customer with a detailed overview of all their financial transactions during the billing cycle. Other components include:
Date range: The period for which the statement shows transactions for typically a month or quarter.
Opening balance: The opening balance represents the initial sums in the account statement and shows amounts that need to be paid.
Invoiced amount: The total amount of good or service you consumed during the current interval.
Amount paid: The total amount that the customer has paid for the products. This includes any previous invoices and the current invoice being paid.
Balance due: The balance due is the amount that the customer owes to the vendor. It can be negative (customer is entitled to money from the company), positive (the company is entitled to money from the customer), or zero (all payments have been settled).
Why is the Account Statement Important?
The account statement is a document that provides the customer with an overview of the previous billing cycle activity. It contains details of any unpaid amounts for the period and the billing cycles before that period.
The account statement gives the customer a summary of their entire transaction history. The customer can review previous transactions that transpired and make sure that they were completed correctly. It also allows the customer to note any minor discrepancies so that they can get them fixed immediately.
The account statement is a listing of all transactions that have taken place between the business and its customers, compiled into one document. It covers information such as payments received, credits or refunds given, deposits on goods made by the customer, money spent on products provided by the business to the customer, interest collected from the customer’s accounts, charges to and for cards, etc.
Accuracy is a key factor in utilizing your business finances effectively. If there are any double charges or double payments, you can both confirm and reconcile them to ensure that your account statement is up-to-date and accurate.
For customers who pay in installments, the account statement simplifies the billing process. When payments are received from the customer, they can be compared against the invoice to catch any discrepancies.
- Account statements are used to keep track of financial activities by individuals or businesses.
- An account statement shows the past due amount plus any follow-up activity on the account to show customers that their funds are available.
- The most common are account balances from checking, savings, and brokerage accounts. Credit card statements are also considered account statements. These account statements show expenditures and other financial information for a specific period.