How to Create and Send Invoices With PayPal

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.

2. Enter your name, email address and phone number 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.

3. PayPal will walk you through several setup screens (note that your business type may necessitate additional information requests):

• Select your business type.
• Enter personal details for the account owner (name, Social Security number or tax identification number and address).
• Enter business details (name, industry, currency, monthly sales, business address and website information, if applicable).

4. Select Add some supporting info to help make the verification process go faster. For example, you may be asked to share proof of your business address and EIN. You can also select Save and Close if you want to do this later.

5. After completing the setup steps, you’ll arrive at your PayPal Business account dashboard. This is where you’ll manage business functions like invoicing and viewing your balance. If you haven’t completed your profile yet, PayPal may limit invoicing and accepting payments. To send invoices and accept payments, you’ll typically need to add additional business information, confirm your email and link a bank account. Once everything is verified, you’ll be ready to send invoices.

Step 2: Create an invoice.

Take the following steps when you’re ready to start invoicing.

1. Select Invoicing from the Quick Access section on your home page. Alternatively, go to Sales > Invoices from the left-hand menu.

2. Select Create New > Invoice.

3. Under the Customer field, choose a customer or select Create New Customer.

4. If you’re creating a new customer, enter their name and email and select Add.

5. Under Items, choose an item or select Create New Item, then 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.

6. Add notes, attachments and other optional details to your invoice as needed.

Step 3: Review your invoice.

Select Preview to preview the invoice. PayPal will pull your company information, including your logo (if you added one) and address, from the business profile you created.

If you want to see how your invoice layout appears in various formats, go to the main invoicing screen and select Settings (gear icon). There, you can select Invoice PDF preview, Mobile preview or Email preview to see how your invoice looks in these formats.

Step 4: Send your invoice.

When you’re ready, select Send at the top of the screen to email the invoice to your customer. You can also select the arrow next to Send to share a link to the invoice, save it as a draft or generate a QR code customers can scan to pay.

A pop-up will confirm that your invoice has been sent.

How does PayPal invoicing work?

Taryn Pumphrey, president of Ledger Lift, emphasized how simple and convenient PayPal invoicing is for small businesses. “With PayPal, creating and sending invoices is quick and intuitive, allowing business owners to focus on their core activities rather than administrative tasks,” Pumphrey explained. “It’s a trusted platform, widely recognized by clients, which can help streamline payments and boost client confidence.”

PayPal invoicing requires no software downloads or app installations. To create an invoice, follow these basic steps:

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

You can create and send invoices from your smartphone, desktop computer or any device with an internet connection. 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.

Pumphrey also pointed out that PayPal can integrate with accounting software to streamline your financial tracking further. “PayPal seamlessly integrates with popular accounting tools like QuickBooks, helping businesses keep track of payments without manual entry, making your bookkeeping process more efficient and less prone to error,” Pumphrey said.

PayPal invoicing features

Patrick McDermott, executive vice president of Max Cash, highlighted several PayPal invoicing features that make the platform attractive for small businesses. “You can set up recurring payments, customize your invoices with your logo and branding and even track invoice history and payment status,” McDermott said.

Here’s an overview of some of PayPal’s standout invoicing capabilities.

Customize invoices

With PayPal, you can customize invoice templates with your logo, contact information, billing terms and other custom fields. You can also save invoices as templates to speed up the invoicing process going forward. PayPal lets you store up to 50 templates for reuse.

PayPal invoicing also helps you manage receivables more efficiently by letting you view billing history, track customer payments and send automatic reminders when invoices go unpaid.

Accept payments

Customers who receive a PayPal invoice can pay you directly via debit card, credit card, Apple Pay or a PayPal account. If you’ve set up Venmo for business, you can also accept Venmo payments through PayPal.

PayPal says 77 percent of invoices sent through its platform are paid within one day. Once a customer pays, the funds are deposited into your PayPal account — typically within minutes. From there, you can use your balance wherever PayPal is accepted, make purchases with a PayPal debit card or transfer the money to your bank account. PayPal charges about 1.5 percent for instant transfers, while standard transfers to a linked bank account are free.

You can also offer PayPal Pay Later options to eligible customers. With Pay Later, you get paid immediately, but the customer can pay off their balance in installments.

Set up multiple invoices

For business owners who charge multiple customers the same price for goods or services, PayPal makes it easy to send multiple invoices at once. You can send a single invoice to up to 100 customers by entering all email addresses in the Bill To field. PayPal then sends a separate, payable invoice to each recipient.

You can also set up recurring invoices to send weekly, monthly, annually or whatever frequency you want.

How much does PayPal invoicing cost?

Creating and sending invoices with PayPal is free. You only pay a fee when a customer pays an invoice online, and the rate depends on the payment method used.

International payments may cost more per transaction.

PayPal alternatives for invoicing

Pumphrey noted that businesses with more complex invoicing needs may be better served by choosing accounting software that can handle more advanced functions. “For businesses looking for more comprehensive features, alternatives like QuickBooks, FreshBooks and Square may be better suited to your needs,” Pumphrey advised. “These platforms offer advanced invoicing capabilities, from recurring billing to fully customizable invoice templates, all while potentially lowering transaction fees.”

The following platforms are a great place to start if you’re looking for more advanced invoicing functionality.

QuickBooks Online

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 mobile-optimized and can be created using 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 its automatic payment reminders, which help with cash flow and collections. Our Xero review explains how the platform integrates with payment processors to enable online payments and stores invoices securely 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. Our FreshBooks review explains how the platform tracks billable time and expenses and easily adds that information to invoices — a valuable feature for professional and consulting businesses like legal offices and marketing firms.