An itemized statement is a detailed breakdown of charges or expenses presented in a clear and organized manner.
It provides a comprehensive list of individual items or services along with their corresponding costs.
Whether you’re running a business or just trying to get your finances in order, itemized statements ensure you know what’s going on with your money.
This guide will explain why they’re so important.
We’ll also talk about itemized bills and lists and when you may need them.
What is an itemized list and, specifically, an itemized statement?
When you put things on a list, you itemize them.
An itemized list is just the name given to a more formal list, usually relating to budgets, reports, or other financial documents.
It often contains extra information on the items included, such as pricing, sizing, or quantities.
Financial institutions may create itemized statements to show account activity during a specific period.
This could be a monthly bank statement or a one-off invoice for work completed by a contractor.
You’ll usually get a breakdown of costs on an itemized statement so that you can see individual outgoings and prices.
Keeping hold of itemized statements is always a good idea, as they can act as proof of purchase, work completed, and financial incomings and outgoings.
As a customer, you may need a proof of purchase for items and services if there’s a problem with the product or you want a refund.
From a business point of view, it’s essential to keep a record of invoices and statements for tax purposes.
Itemized statement examples: When and why might they be used?
Itemized statements are used in all areas of business to help keep finances in order.
Here are some examples of when and why you may use them.
Bank accounts
A statement is usually provided monthly with any kind of bank account. This shows your incomings, outgoings, and any charges to your account e.g. overdraft fees.
If you ever suspect you’ve become a victim of fraud, an itemized bank statement can provide proof of this.
As it shows your monthly outgoings, you could highlight any transactions you didn’t recognize and report them to your bank.
Credit statements
If you buy anything on credit, you’ll receive a monthly bill showing your purchases, interest, and any payments needed.
This could be credit cards, car finance, buy now, pay later services, online catalogs, etc.
Loan statements
If you take out a loan, you’ll also receive a monthly statement showing how much you’ve borrowed, interest costs, and how much you’ve paid off.
It’s worth taking a second look at these types of statements to make sure no extra charges are added.
For example, in the past, loan companies have added financial protections that customers didn’t ask for.
Household bills
When most people get their water and other utility bills, they look straight at the total, but you’ll also receive an itemized bill.
This may be a breakdown of individual gas and electricity costs for your energy bills or an itemized list of extra charges on your phone bill.
Invoices
Businesses and sole traders often send invoices to clients so they can pay for services and products.
These must contain a clear description of what the client is paying for.
Invoice examples include itemized bills for contract work on a house, paper receipts from supermarkets, and electronic invoices for items bought online.
How can I obtain an itemized statement?
If you have an account with any financial institution, they have to make your statements available to you in some way.
If you need an itemized statement for a specific time frame, you can contact your bank, for example, and ask for one to be sent.
However, as most companies allow customers to create online accounts, it may be easier for you to register or log in to their website or app and download a statement yourself.
Equally, if you’re a customer who’s purchased a one-off service or product, you should be able to contact the seller and ask for a statement if you need one.
Even supermarkets can often locate past transactions on their systems and print out itemized receipts.
What are the benefits of itemized statements?
From a business point of view, it’s vital to keep itemized reports of your finances.
You’ll need these when the end of the financial year comes around, but they may also be helpful if you’re looking for investors or ever get into financial difficulties.
From a customer point of view, itemized statements show exactly what you’re paying for.
They give you the option to question charges and remove any added extras that companies may not have told you about.
When dealing with personal finances, you can use your bank statements to create a monthly budget based on your income and outgoings.
Itemized statements can help you put together a plan to pay off any loans or credit cards too.
Itemizing financial documents to provide clarity
When providing financial documents for customers, they must be clear and easy to read, but many businesses struggle to create simple statements and invoices their customers can understand.
At PandaDoc, we’ve stepped in to help, creating numerous professional invoice templates to choose from, so you don’t need to waste time that you could spend on more important tasks.
For example, if you’re just starting out as a freelancer, why not try out our freelance invoice template? Or see what else we have to offer with our 14-day free trial.
