Written by Darren Lai, Nurul Athirah Ja’afar & Roshaan Ramu


For any genre of business, it is a norm to always keep track of and record all the transactions made with the buyers. Particularly, these are often seen with the use of Statements of Accounts by vendors and trading businesses which involve cash on delivery or credit sales.

What is a Statement of Account? 

A Statement of Account is a document that mirrors every transaction which has taken place between the vendor and its specific buyer over time. They are issued to buyers in order to notify them of the sum of the total credit sales during that specific period. It is often used as a collection tool in order to precisely keep into account sums owed to the vendor. 

It is an effective method of record tracking as it is issued in an email, followed by a payment link, which would allow buyers to fulfil their payments owed with a credit card. These Statements of Accounts would also allow vendors to detect any sort of inconsistency with their financial matters, as they are able to track each and every sale that has been paid and those which are unsettled. They are usually issued to recurring buyers and it comes as an addition to individual invoices sent to their customer after any sort of purchase. 

Importance of having a Statement of Account

For the most part, having a Statement of Account allows vendors to know the progress of the business, allowing them to know what has yet to be paid by the buyer. It is also good practice that both parties can compare their related accounts with each other and ensure that they are on the same page. For the vendor, it creates an ease of reference to know what the buyer has paid for and what they would still owe. 

In terms of legality, it is important to own a Statement of Account involving businesses where goods are sold and delivered without any written form of agreement, i.e where there are only issuance of purchase orders and invoices. 

Recently, this significance has been made known and judicially accepted in the recent case of Shaoxing County Baimei Trade Co Ltd v Khaleeg Marketing Sdn Bhd (Civil Suit No WA-22NCC-378-08/2020) where the High Court judge decided in favour of the plaintiff because they were running a Statement of Account despite there being no other documentations available.

The following is a brief summary of the recent case of Shaoxing County Baimei Trade Co Ltd v Khaleeg Marketing Sdn Bhd (Civil Suit No WA-22NCC-378-08/2020):

This case involves a claim by the plaintiff for the outstanding amount owed by the defendants in regards of goods sold and delivered. The defendant had chosen to not provide evidence, and made a submission of no case to answer on the basis that, among others, the plaintiff had failed to prove the existence of a running account between the plaintiff and the defendant. 

The High Court had considered the evidence of the plaintiff and was satisfied that the balance of probabilities had been proven, that there was a recurring contractual relationship between the defendant and the plaintiff. Other than that, there was a running account kept for the outstanding amount owed by the defendant to the plaintiff, which allowed the plaintiff’s claim.

The High Court placed its reliance on a vendor’s Statement of Account vis a vis running account and recognised as such to constitute a continuing contractual relationship between a vendor and a buyer. In the event where the vendor is able to establish that an ongoing contractual relationship has been maintained and has been duly acknowledged by the buyer, it binds the buyer on its liability to the outstanding amount due owing. 

Based on the above, the Statement of Account comprised of the following: 

  1. name of the seller of the goods;
  2. name of the buyer of the goods;
  3. invoices issued by seller to buyer together with associated details such as contract numbers, description of the goods, quantity ordered, price per unit of the goods and amount outstanding from each invoices issued; 
  4. total sum outstanding for the invoices;
  5. total arrears carried forward; 
  6. payments that have been received by buyer; 
  7. any outstanding amounts; and
  8. signature at the bottom of the statement of account reflecting the intention of the buyer to acknowledge its liability to the seller for outstanding amounts in the statement of account.

The High Court decided that the plaintiff’s claim was allowed on the basis that the plaintiff had, on a balance of probabilities, proven the defendant’s indebtedness for the Outstanding Amount as set out in the Statement of Account. This clearly shows the importance of having a Statement of Account. 


In summary, it is good commercial practice for businesses and enterprises to maintain a Statement of Account for all business transactions made with its buyers. For instances of goods sold and monies that have not been paid, a Statement of Account may just save business owners in circumstances where there is no other documentation available to prove their case.


Published on 3 February 2023


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