TOPIC 8

PAYMENT

Prepared by : Group 5:

Vita Corisa (2015613009)

ACCOUNTING DEPARTEMENT
BALI STATE POLYTECHNIC
2021
 TOPIC 8
PAYMENT
INVOICE
A. Definition of Invoice

Invoices are one of the main documents used in trading. They are not only requests for
payment but also records of transactions which give the buyer and seller information
about what has been bought or sold, the terms of the sale, and details of the transaction.
An invoice may be accompanied by a short covering letter or email offering additional
information the customer might need. an invoice is always sent with an order. Customers
who do not have credit must pay the total amount of the invoice.
B. Functions of Invoice
1. Provides information regarding price and quantity of a transaction
2. Provides information regarding the details of the supplier such as name, address,
business registration number, tax identification number of supplier.
3. Provides details regarding the customer to whom it is invoiced.
4. Acts as a legal document or a document to support encase of an issue regarding a
particular transaction, etc.
C. Parts of Invoice
1. Invoice date
This shows the customer the date the invoice was created.
2. Customer information
Clearly state the customer’s name, business (if applicable), address, and phone
number on the invoice.
3. Seller/Company information
Include your business’s name, address, email address, and telephone number. That
way, a customer can contact you if they have any questions.
4. Invoice number
When you create an invoice, be sure to number it. And, make a note of the invoice
number in your business records. An invoice number will let you easily look up the
invoice in the future. Let’s say a customer calls with questions about their invoice.
They can give you the invoice number so you can find them in your system.
 5. Goods and/or services purchased
List out the exact products or services, quantities, and prices the invoice is for. A
good description will alleviate potential confusion.
6. Total amount due
After adding up the total and sales tax (if applicable), include the total amount the
customer owes you. If they paid part of the total at the time of purchase, make sure
to account for that.
7. Payment terms
You must include invoice payment terms detailing when the payment is due. Also,
list payment methods you accept. Write where the customer can make checks
payable to. If you offer discounts for early payments, write it on the invoice.
D. Methods of Payment
1. Cash
Method of payment of debt with cash is to pay the debt directly using cash, worth
the amount of debt owned
2. Bank draft
In the case of a bank draft, the customer buys a cheque from the bank for the
amount he or she wants to pay and sends it to the supplier. Banks usually require
two of their directors signatures on drafts, and make a small charge.
3. Bank transfer
A bank transfer is when a bank moves money by order from one account to another.
4. Cheque
The customer must have a current account, or certain types of saving account, to
pay by cheque . Cheques can take three working days to clear through the
commercial banks, and can be open, to pay cash, or closed (crossed) to, be paid into
an account.
5. Credit transfer
In the case of credit transfer, the customer fills out a bank giro slip and hands it in to
a bank with a cheque. The bank then transfers the money to the supplier.
6. Debit / credit card payment
Debit and credit card payments can be made either direct on the phone, or on the
Internet.
E. Example of Invoice

STATEMENT
A. Definition of Statement
A statement of accounts is a document that reflects all transactions that took place
between you and a particular customer for a given period of time. Generally business
owners send statements of accounts to their customers to let them know how much they
owe for sales that took place on credit during that period.
A statement is an up-to-date report on what buyers still owe vendors on account. For
instance, statements of account are issued monthly, and list all the transactions – both
credits (money added to the account) and debits (money taken away from the account to
pay for goods and services purchased) that occur over the course of the month.
 A statement is meant to compel a buyer to make a payment on their account. The
statement includes the most recent charges and notifies buyers of any amounts that are
still owed on previous purchases. It covers invoice status for a given period of time,
usually monthly, and is sent on a regular basis.
B. Functions of Statement
1. To remind a customer of sales on credit that have not yet been paid to the seller.
2. To give details of all the transactions between the buyer and seller for that period.
3. To allow the buyer to cross reference the invoices and credit notes with those on
their own system.
4. Acts as a legal document or a document to support encase of an issue regarding a
particular transaction
C. Parts of Statement
1. Seller information, include company name, address, email address, and telephone
and fax number. That way, a customer can contact you if they have any questions.
2. Customer information, include customer’s name, business (if applicable), address,
and phone number on the invoice.
3. Statement number, used as a sequence number, how many statements that the
company issued in a period.
4. Opening balance of unpaid invoices,
5. The invoice number, invoice date, and total amount of each invoice issued to the
customer during the time period.
6. The credit number, credit date, and total amount of each miscellaneous credit issued
to the customer during the time period.
7. The net remaining balance of all transactions listed. This is the total amount payable
to the seller.
8. Reminder and term of reference for the invoice
D. Example of Statement
DIFFERENCES BETWEEN INVOICE AND STATEMENT
1. An invoice serves to ask a buyer for payment. The invoice also let the buyer know
about the cost of each item that is included in a purchase order while a statement is
meant to compel a buyer to make a payment on their account. The statement
includes the most recent charges and notifies buyers of any amounts that are still
owed on previous purchases.
2. An invoice provides more detailed information about a specific sale, such as the
item description, item price, shipping charges, and sales taxes, while a statement
only provides a grand total due for each invoice.
3. Invoices are issued whenever a sale has been completed, while statements are only
issued at set intervals, such as at the end of the month.
4. The buyer records a payable when an invoice is received, but records no
accounting transaction at all when a statement is received, since the statement is
only informational in nature.
COVERING LETTER
A. Definition Covering Letter
A cover letter is a letter used by an individual or business when sending an invoice or
statement to explain the content of them. Companies do not usually send covering
letters with invoice or statement. However, if accounts are not settled within the agreed
period, a company will send a polite first reminder to its customers. The letter should
describe the details of the invoice as well as show appreciation for the customer’s
business and when the payment is due. The invoice cover letter is placed on top of an
invoice or as the first (1st) page to introduce the billing party or to add context to the
breakdown of the bill. The letter should describe the details of the invoice as well as
show appreciation for the customer’s business and when the payment is due.
B. Function of Covering Letter
This cover letter is intended to enable the recipient to recall what the invoice relates to
by providing a succinct explanation of the contents of the invoice.
C. Making Good Covering Letter
1. Keep it clear and concise
This is not the place for flowery prose. State clearly and concisely that the invoice
has not been paid and that you expect payment. Don't forget to state which invoice
(or invoices) it concerns and what the total outstanding amount is.
 2. Set a deadline
Don't give the impression that additional postponement is possible. Give the
customer a final payment date. In your reminder letter, state the date on which the
invoice must be paid at the latest. Also follow these tips to prevent a backlog of
outstanding claims from piling up.
3. The writing tone
If it’s the covering letter, be as polite and friendly as possible, but professional. Do
not assume intentional nonpayment, imagine that they just forgot or are having
complications with bank transfers. The letter is a covering, do not make any
accusations.
D. Parts of Covering Letter
In general, part of a covering letter of payment is the same as a business letter. The
following are things that need to be included in a payment covering letter :
1. Heading (letterhead/sender’s address)
This is written on the top of the page and at present, it is made in the form of a
printed letterhead. It includes the name of company, line of business, and address.
It is also possible to give the telephone number, fax. number, cable and telex.
2. Inside Address
Inside address include the name of the person the letter is being addressed to,
address of the person the letter is being addressed to, state, city, and the zip code of
the person the letter is being addressed to.
3. Date
The date of writing the letter should appear after the letterhead. A date is an
essential tool for reference.
4. Salutation
It is written below the inside address and above the body of the letter. There are
different kinds of salutation and the use of each of them is depended on to whom
we write our letter.
5. Body
Mention what you are enclosing. If you have attached several items, be sure to list
them specifically either in the body of the letter or with an enclosure notation after
the signature block. If, for some reason, the items get misplaced or inadvertently
omitted from the package, your reader will know documents are missing.
 6. Complimentary Close
Your payment covering letter should end with a nice close. Common phrases used
include; “Yours faithfully.” Cordially”, “Sincerely yours,” “Sincerely,”
“Respected.”
7. Footer
The last section of the letter should include your name, designation, company, and
contacts.
E. Example Covering Letter
LANGUAGES FOCUS
1. Invoice or Statement Details
Enclose them exactly what it is they have not paid for. be sure to mention the invoice
number, the amount needed, and the date on which the payment was due. This will
help the customer to understand more about the payment.
Example:
a. We Enclose a copy of our statement dated 1 April for $8825.04.
b. We have prepared and attached the settlement statements for the sale of Loboy,
Inc.’s, Hammerly and Simon gas plants to NRT Fuels.
c. You will find enclosed the statement dated 31 December for $100
d. I am enclosing copies of our invoice number PJCS-001 for $1000

2. Reminding
Get straight to the point by telling the receiver of the late payment. Remind them
exactly what it is they have not paid for, and the amount. State the date the payment
was due. Use a polite and formal languages for this paragraph
Example:
a. We would like to remind you that our terms are 30 days.
b. We would like to remind you that full payment on invoice MT 18375, which we
sent on March, 25th 2021 for $234.00 must be made within 30 days of receipt of
goods.
c. This is a friendly reminder that the following invoice PJ-001 is now days overdue.
d. We have not received your store rent of $100 this month. May we remind you that
your tenancy agreement will pay off every 23rd of each month.
3. Expressing Conditions
Sometimes some errors in recording payments within the company can occur, for
example the staff has not checked incoming payments so that when customers have
made payments they can disregard this reminder letter, or the customers have some
financial problem so they can’t pay their debt.
Note:
If + Verb (present perfect)…. Please + Verb
(imperative) Example:
a. If you have settled the account in the last few day, please disregarding this letter
 b. If you have paid this invoice, please ignore this reminding letter.
c. If you are unable to pay off your debt, please create a letter requesting a
suspension of payment.
d. If you have not paid the rent for a reason, please do feel free to get in touch with
me to discuss and resolve the issue.
REQUESTS FOR PAYMENT
A. Definition of Requests for Payment
Request for payment letter is a payment request letter that is sent when the payment has
passed the specified time limit. This means that the client has not paid within the agreed
timeframe.
B. Structure of Request for Payment Letter
1. Company name or letterhead
2. Author’s address
3. Date
4. Receiver’s address
5. Subject
6. Opening
7. Body
8. Closing
9. Salutation
10. Signature
C. Example
Sampson’s Stationary
30 Silverstone Ave
Kamloops, BC
V2A 8B1
Tel:250-429-0002

February 21st, 20–

Mr. Ken Davis

Dear Mr. Davis:

If this amount has already been paid, please disregard this notice. Otherwise,
please forward us the amount owed in full by March 1st, 20–. As our contract
indicates, we begin charging 5% interest for any outstanding balances after 30
days.

Thank you in advance for your cooperation. We hope to continue doing

Sincerely,
Maria McPhee

Maria McPhee
Accountant

CONCLUSION

Invoice is not only requests for payment but also records of transactions which give the buyer
and seller information about what has been bought or sold, the terms of the sale, and details
of the transaction, while a statement is a presentation of the total amount owed by the
customer at a given point in time. Both are used as written evidence in trade transactions A
cover letter is a letter used by an individual or business when sending an invoice or statement
to explain the content of them. Companies do not usually send covering letters with invoice
or statement. Covering letter uses three type of language focus, that are invoice and statement
details, reminding and expressing conditions.
REFERENCE
Anoname. Free, downloadable sample invoice template. Ease your billing headaches. URL :
https://www.paypal.com/us/brc/article/sample-invoice-template. Retrieved March 22, 2021.
Anoname. What is a statement of account?. URL : https://informi.co.uk/finance/what-are-
statements-account. Retrieved March 18, 2021.
Anoname. 2020. The difference between an invoice and a statement. URL :
https://business.tutsplus.com/tutorials/how-to-write-a-friendly-reminder-email--cms-28346.
Retrieved March 16, 2021.
Anoname. 2021. Guidelines: Invoices, Cover Letters/Explanation of Fee For. URL :
http://www.bizdocx.com/business-letters/cover-letters/invoices-cover-lettersexplanation-of-
fee-for/. Retrieved March 25, 2021.
Anoname. 2021. Invoice Cover Letter Template. URL : https://onlineinvoice.com/cover-
letter/#:~:text=The%20invoice%20cover%20letter%20is,when%20the%20payment%20is%2
0due. Retrieved March 25, 2021.
Ashley, A. 1984. A Handbook of Commercial Correspondence. Oxford University Press.
Blakely, Rachel. 2017. What Is an Invoice. URL :
https://www.patriotsoftware.com/blog/accounting/what-is-invoice-purpose-how-to-create-
parts/#:~:text=Parts%20of%20an%20invoice,-

What%20does%20an&text=Invoice%20date%3A%20This%20shows%20the,email%20addre
ss%2C%20and%20telephone%20number. Retrieved March 20, 2021.
Bragg, Steven. 2020. Statement of account definition. URL :
https://www.accountingtools.com/articles/what-is-a-statement-of-account.html. Retrieved
March 18, 2021.
Delvecchio, Lyle. 2020. Invoice Vs Statement: What’s The Difference?. URL :
https://planergy.com/blog/invoice-vs-statement/. Retrieved March 18, 2021.
Fowzy, Adil. 2015. Start networking and exchanging professional insights. URL :
https://specialties.bayt.com/en/specialties/q/128875/what-is-the-function-of-an-invoice/.
Retrieved March 20, 2021.
Writing, Letter. 2020. Invoice Cover Letter. URL : https://www.letters.org/cover-
letter/invoice-cover-letter.html. Retrieved March 25, 2021.