How to Create and Send Invoices With PayPal

PayPal facilitates fast, efficient invoicing that can improve your business's cash flow.

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Small business owners need an efficient, accurate invoicing system to ensure they’re paid promptly. The easier it is to set up and send invoices, the better your chances of staying on top of accounts receivable — a task that can make the difference between success and failure.

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Here’s where PayPal Invoicing comes in. Most business owners are already familiar with the ubiquitous payment company but may not know about its robust suite of business tools, including invoicing. We’ll provide a detailed look at PayPal Invoicing, including a step-by-step guide on creating invoices quickly and easily.

Without efficient invoicing and follow-up, your small business may encounter cash flow problems and struggle to make payroll and pay vendors.

How to create and send invoices via PayPal

Creating and sending invoices with PayPal is straightforward. As a bonus, you can also accept credit card payments and other payment methods directly from your PayPal invoices, helping your business increase cash flow.

To start invoicing with PayPal, take the following steps.

Step 1: Create a PayPal business account.

A free PayPal business account allows your business to create professional invoices, accept payments on your website, make payments and more. Here’s how to create your PayPal business account:

1. Navigate to PayPal’s Open a Business Account web page and select Sign Up. You’ll be prompted to create an account.

1. Enter your name and email address and create a password. Select Agree and Create Account to agree to PayPal’s terms and start the account creation. You may be asked to confirm your email with a code.

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1. You’ll be taken to your account, where you can begin adding information. Confirm your email address and select Complete your profile to finish creating your business profile.

1. Designate your business type and enter all required information, including the business name and contact information, your tax identification number, product or service information, monthly sales figures and more. Your PayPal Business account is ready to use (although you can continue adding and modifying information).

Step 2: Create an invoice.

1. From your main PayPal business account dashboard, select Invoicing from the Quick Links section. Alternatively, go to Sales >Invoices from the top menu.

1. Under the Who are you billing? header, choose a customer or select Create New Customer.

1. In the What Are They Paying For box, choose an item name or select Create New Item and enter its details, including the price per unit (for goods) or the number of hours and hourly rate (for services). Select Add when you’re done.

1. You can add additional charges or discounts, payment terms, notes and attachments. PayPal will pull your company information, including your logo and address, from the business profile you create. You can give customers the option to make partial payments and even add a tip.
2. The items and customer information will populate the invoice shown on the right of the screen. You can see what it will look like as a PDF, in an email or on a mobile device:

• PDF view: The default view, shown below, is the PDF version. This is suitable for either printing or sending as an email attachment. Unlike the other two versions, the PDF version does not offer customers a way to pay their invoices online quickly and conveniently.

• Mobile view: Customers will see the mobile invoice version on their mobile devices. They can select a payment method to pay the invoice immediately.

• Email view: The email version of the invoice has the option to View and Pay Invoice.

6. When you’re ready to save the invoice, go to More Actions > Save Draft.

Step 3: Review your invoice.

Carefully review your invoice via the available previews to ensure it’s accurate and error-free. You’ll see what your customers will receive. This is a crucial step to ensure professionalism.

Step 4: Send your invoice.

When you’re ready, select Send at the top of the screen. You’ll see a pop-up confirming that the invoice was sent.

PayPal allows you to automate invoicing to take advantage of recurring revenue. Be sure to add all customers to your address book to speed up the process.

How does PayPal invoicing work?

PayPal Invoicing is an easy way to create and send invoices. There is no software to download or app to install. You simply take the following steps:

1. Log in to your account.
2. Select Invoicing from the Quick Links or Sales >Invoices from the menu.
3. Enter your invoicing information.

PayPal’s straightforward invoicing function allows time-crunched business owners to quickly send and forget about invoices. You can create and send invoices from your smartphone, desktop computer or any device with internet access. Once created, you can send your invoice via a shared link or email. You can also print a PDF and mail it to your customers.

If you need a broader financial solution, check out our reviews of the best accounting software platforms, many of which have robust invoicing capabilities.

PayPal invoicing features

PayPal’s invoicing capabilities are impressive and include the following features:

• Customize invoices: With PayPal, you can customize your invoice template by adding your logo, contact information, billing terms and other custom fields. You can save an invoice as a template to speed up the invoice process going forward. PayPal allows you to save up to 50 templates. PayPal invoicing also helps you manage receivables better by viewing billing history, tracking customer payments and sending alerts and reminders when invoices go unpaid.
• Accept payments: Customers who receive a PayPal invoice can pay you directly via a debit card, credit card, Venmo, Apple Pay or PayPal account. PayPal claims invoices sent through its platform are paid on average in less than three days. Close to 80 percent of invoice payments arrive within one day of sending the invoice. Once a customer pays the invoice, the money is deposited into your PayPal account — in most cases, within minutes. You can use your balance wherever PayPal is accepted, make transactions with a PayPal debit card or transfer the money to your banking account. PayPal charges 1.5 percent of the total amount for instant transfers up to $15. Standard transfers to a linked bank account are free. You can also offer PayPal Credit to eligible customers. With PayPal Credit, you get paid immediately, but the customer can pay off their balance in installments.
• Set up multiple invoices: For business owners with multiple customers paying the same price for goods and services, PayPal makes it easy to send multiple invoices at once. You can send the same invoice to as many as 100 customers. Enter all email addresses in the “Bill To” field and PayPal sends a separate payable invoice to each customer. You can also set up recurring invoices to send weekly, monthly, annually or whatever frequency you want.
• Send quick invoices: The sooner you send an invoice, the faster you’ll get paid. If you want to bill customers on the spot, you can use PayPal’s quick invoice feature, which lets you send invoices from your mobile device.

If you need an easy, affordable credit card processing solution for your business, read our detailed review of PayPal.

How much does PayPal Invoicing cost?

It is free to create and send invoices with PayPal. However, you’ll pay fees when your invoices are paid online. PayPal charges 2.89 percent plus 49 cents per domestic transaction. For example, if your customer pays you $100, PayPal gets $3.38 of that amount.

PayPal alternatives for invoicing

If you prefer a more traditional platform for invoicing, consider choosing accounting software that can handle all your financial management needs. The following platforms are a great place to start.

QuickBooks

QuickBooks is one of the most well-established small business accounting software solutions. In addition to its easy-to-use basic accounting features, it allows you to create professional-looking invoices. Invoices are optimized for mobile devices and can be created via the QuickBooks mobile app. Our QuickBooks Online review explains how you can set up online payments through QuickBooks Payments or a third-party processor to receive payment directly from your electronic invoice.

Xero

Xero enables you to schedule recurring invoices indefinitely or with a set end date. Another great feature is how Xero sends automatic payment reminders, helping you with cash flow and collection. Our Xero review explains how the platform integrates with payment processors to enable online payments and stores invoices in the cloud.

FreshBooks

FreshBooks has numerous features that make it easy to create and track invoices and follow up on payments. In addition to creating professional invoices, sending automatic payment reminders and integrating with payment providers, FreshBooks allows you to track an invoice’s status after you send it, letting you see when a customer receives and views it. Read our FreshBooks review to learn how this platform tracks billable time and expenses and easily adds this information to invoices, which is great for professional and consulting businesses like legal offices and marketing firms.

Donna Fuscaldo contributed to this article.

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