![]() Let’s imagine a scenario: you run a small business, and you request clients make a 20% deposit before the project begins.īut you’ll also need to pay contractors and freelancers to keep the client’s project moving forward. This is because it’s technically a ledger that keeps an account of what comes in and what goes out, and is sent at the end of the month.įor example, if you have an account with Client A for Projects X, Y, and Z, it’ll help you keep track of how much money you got from the same clients and how much you spent on their project-related activities. On the other end, a statement only covers the basic elements. Payment terms (such as payment due date).Quantities, product/service descriptions, and discounts.An itemized list of all products/services.Here are a few things every invoice needs to have: While the primary purpose of any unpaid invoice is to collect the balance due from clients, they also help with other tasks, such as maintaining cash flow and having data for bookkeeping and tax purposes. You can even send invoices once the project is done or if you achieve certain project milestones.Īn invoice can also be of different types and can be used for different cases (e.g., sales invoice when you deliver a product/service, commercial invoice for international payments, debit invoice to correct accounting errors, etc.). While it’s usually sent at the end of the month, there’s no hard and fast rule as such. Let’s get to it! What is an invoice?Īn invoice is a formal document that contractors or business owners send to their clients to collect payment. If you believe that invoices and statements are documents that have something to do with a summary of payment items or payment-related procedures, you’re both right and wrong.Īnd if you really wish to understand what these two documents entail and how they differ from each other, this article is for you. Or are they like “anachronistic” and “ephemeral” - words that everyone pretends to know in a conversation, but if you’d ask them to come up with a textbook definition, nothing would pop up? Nevertheless, no matter how many times you’ve crossed paths with invoices and statements, whether the words were written or said aloud, do you really know what they mean (and, specifically, how they differ from each other)? (For example, if you’re 25 years old, you’ve likely heard these terms at least 25,000 times by now.) ![]() Here’s an (unproven) fact: the number of times these words have hit your ears is directly proportional to how old you are. If you’re above the age of, say, ten, then you must have heard the terms “invoices” and “statements” before. ![]()
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