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Statement billing is a billing method in which all accounts from a given period are listed in a written document. This written document, called a statement, is sent periodically. It is an alternative to point-of-sale billing or to a requirement that a customer pay for each item individually.
Often, a customer will make multiple purchases during a set period of time. A company could bill the customer for each of the purchases individually. This, however, would be time consuming and expensive.
Instead, statement billing is used. All of the purchases from the set time period are listed on one list. The list includes details on the date of purchase and the amount owed. It commonly also includes details on the type of purchase, such as the item purchased or the location purchased.
Statement billing is standard for credit card companies. Consumers use their charge cards regularly throughout the billing cycle, which is normally 30 days. When the billing cycle ends, a new 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 for all of the items listed on the statement in full by a set date. American Express, for example, has certain cards that require customers pay off their balance in full each month, and suppliers to professional corporations who use statement billing may also require monthly payment in full.
In some cases, the items listed on the statement do not all have to be paid for in full. Instead, the statement lists a minimum amount of money due toward the balance owed. The customer can pay the minimum, or anything beyond the minimum he wants, and the remaining balance is carried over to the next statement.
There are many benefits for companies who use statement billing. Invoicing for multiple purchases in one single bill is far more cost effective and efficient than sending several small bills throughout the course of the month. The company can determine the length of the billing cycle before the statement is sent. Statement billing also allows for easier record keeping since all purchases are listed on one form.
Customers benefit as well, since they can make a single payment. Credit card customers, for example, would likely find it inconvenient if they were required to send in a payment to the credit card company every time they charged on their card. The record keeping benefit that applies to companies also applies to consumers, who can save their statements and have a record of everything they charged during the month.
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