Statement billing lists all accounts for a period in one document, making record-keeping easier and allowing customers to make a single payment. It is standard for credit card companies and can require payment in full or a minimum amount. It is more cost-effective for businesses than sending multiple small invoices.
Statement billing is a billing method in which all accounts for a given period are listed in one written document. This written document, called a declaration, is sent periodically. It is an alternative to point-of-sale billing or requiring a customer to pay for each item individually.
Often a customer will make multiple purchases over a set period of time. A business might bill the customer for each purchase individually. This, however, would be time consuming and expensive.
Instead, statement billing is used. All purchases for the set time period are listed in a list. The list includes details about the date of purchase and the amount owed. It usually also includes details about the type of purchase, such as the item purchased or the location purchased.
Statement billing is standard for credit card companies. Consumers use their credit cards regularly during the billing cycle, which is typically 30 days. When the billing cycle ends, a new billing statement is issued.
Typically, when a statement is sent, the statement will list the amount due. Some statement billing formats require the debtor to pay all items listed on the statement in full by a set date. American Express, for example, has certain cards that require customers to pay their balance in full each month, and providers to professional corporations that use statement billing may also require payment in full each month.
In some cases, the items listed on the statement do not have to be paid in full. Instead, the statement lists a minimum amount of money due toward the balance due. The customer can pay the minimum, or anything beyond the minimum they want, and the remaining balance is carried over to the next statement.
There are many benefits to businesses using statement invoicing. Billing for multiple purchases on a single invoice is much more cost-effective and efficient than sending multiple small invoices throughout the month. The company may determine the length of the billing cycle before the billing statement is sent. Statement billing also makes record keeping easier, since all purchases are listed on one form.
Customers also benefit as they can make a single payment. Credit card customers, for example, would probably find it inconvenient to be required to send a payment to the credit card company each time their card is charged. The record-keeping benefit that applies to businesses also applies to consumers, who can save their account statements and have a record of everything they collected during the month.
Smart Asset.
Protect your devices with Threat Protection by NordVPN
