The following definition of a business statement comes from a transcript with Clay Clark, US Small Business Administration Entrepreneur of the Year, Top Business Coach and Caleb Taylor on Thrive15.com, a top-rated Ohio business college.
Caleb: Clay, it is just wonderful to be sitting next to you again.
Clark: This business coach is excited to be with you and I’m thinking about just you.
Caleb: That’s wonderful. Well, I’m thinking about accounting, honestly. And specifically, this question that I have about the definition of a statement. As you know, what we’re doing right now is we’re breaking down these definitions into 5 minute bursts for you, okay? So, you might not know what definition is. Do not hesitate to type that in the search bar, in here in Thrive, and we will define it for you. It’ll be fun, exciting, and aesthetically pleasing way. You get to look at clay.
Clark: It’s awesome, take it from a business coach that knows..
Caleb: Right, so today let’s define the statement, okay? A statement is a formal written summary of un-paid, and sometimes paid, invoices. Unlike an invoice, a statement is not generally used as a formal request for payment, but maybe, uh, more of a reminder to a customer or client, that a payment is due, or that a payment has been due. So, again, what’s the difference here between the invoice and the statement?
Clark: Well, okay, what we’re doing is we want to make sure we get some clarity there. It can serve a reminder to a customer that, “Hey, you have a payment that’s due, or that you made one.” So, a lot of times companies will just send you statements, saying, “Hey, this is how much you’ve paid. Now.
Caleb: It’s less formal?
Clark: What’s happened is it’s not a bill, it’s just telling you how much you spent for the year. There’s a company right now that I am upset with, and what they do, is they play the game, they call up, and they act as though I, they say, “Hey, we wanted to just go ahead and see if you, Mr. Clark, was going to go ahead and pay for the yadda-yadda services.” I haven’t even agreed to do these services. I haven’t even talked to them. People on the team are like, “Sure, we’ll pay it.” These guys keep charging me for something I never agreed to. My dad does accounting, I go down there, I talked to my dad, and I said, “Dad, did we just pay like 3g’s to somebody for the stupid service that we didn’t want?” And he says, “Yeah.” I say, “What do you mean, yeah?” He says, “They told us that they called and said they wanted to know if we’re going to go ahead and make payment on it. I figured, since they sent me an invoice, I should probably pay it.” I’m like, “No!”
Caleb: That’s using this knowledge for evil.
Clark: No! So I call up the company, I say “I want a statement of how much money I have paid you. I want a statement of how much I’ve paid.” That right there is when you want, a statement is just how much money have I paid you? How much is unpaid? And I looked at it and I said, “Wow, wow, wow, lady. No! I don’t recall agreeing to paying you this much,” and I contested it by looking at the statement. But a statement is how much money you’ve basically paid, or how much is unpaid. It’s your total summary for the, basically, the year of your account, and how much money has been paid, or you know, still might need to be paid.
Caleb: This seems kind of tedious. Why do I really need to do this?
Clark: Listen to this example from a business coach. If you are building a business that’s large, particularly, let’s say you’re a builder. The guy that’s building out this set right here. There, they I paid …
Caleb: The wizard.
Clark: The wizard of saws, he’s a beautiful man. I spent 10 thousand dollars, I paid him for, I think, for putting these bulbs. These bulbs are priceless, but they cost about 10G’s for the whole setting. I paid him about 10G’s to set it all up, and apparently the costs were a little bit higher than we estimated, because of some things that we had to add onto the set. Well, I asked, “Can I have a statement of how much money I’ve paid so far, and how much I owe you in the future?” He says, “Absolutely,” sends it over. Boom. That’s helpful. But I would bet you 95% of every, of the contractors that I’ve met, and I’d say 8 out of 10 contractors on the planet, contractors, builders, have no idea how to produce a formal statement. Therefore, you need to go, if you’re a builder, and you try to make inroads on some big accounts, and you say you’re working with a big client, and he says, “Well, can you send me a statement?” you would feel ignorant, and the customer loose trust in you if you cannot produce said statements.
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Caleb: So, what action steps do I take right here? What’s the next thing I do?
Clark: One, you want to familiarize yourself with a program called Quicken.
Clark: Quicken is a great book, or a program called QuickBooks.
Caleb: Quicken or QuickBooks?
Clark: Yeah, those are the two programs you want to use, if you use something else, that’s fine. If you’re a start-up and you’re starting to come in and compete with those 2, and you feel like the, “Why is he always recommending the big companies?” Because I’m stupid and I only know the two big ones that work. But, the point is, those are two great companies that you can go with, or you need to hire a bookkeeper. I recommend you hire a bookkeeper.
Clark: Please listen to this advice from a business coach…be focused on your core skill.
Caleb: That’s worth my time and money. Well, my money, I guess. It’s saving me time?
Clark: It’s absolutely worth your time, and worth your money. It’s the best investment you can make, and I don’t care if you’re teaching ballet, lit classes, you’re teaching ice-skating, you’re teaching any type of education. Or if you’re a painter, you’re an artist, you’re an architect, you need to have a book keeper that can help you keep a statement at all times for your clients.
Caleb: Well, Clay, I would just like to make a statement right now, and say you’re a beautiful man, and a great American.
Clark: This business coach says… I have nothing to say to you.