PayPal revolutionized digital payments when it launched in 1998, allowing anyone to securely send money online. Over two decades later, it has evolved into far more than just a payment processor for peer-to-peer transactions. With over 400 million active user accounts globally, PayPal offers a robust suite of financial services for both personal and business needs.
One of its most useful features that is often overlooked is PayPal invoicing. It provides a free, convenient way for freelancers, solopreneurs and small business owners to create professional invoices and request payments from clients.
Compared to PayPal‘s money requesting feature, invoices allow greater customization and management of billing details. You can add multiple items/services, customize branding, set up recurring invoices, reminders and more.
In this comprehensive guide, we‘ll explore the ins and outs of PayPal invoicing and walk through a step-by-step process for creating and sending invoices directly from PayPal.
A Brief History of PayPal
PayPal originated in 1998 from a merger between two companies – Confinity and X.com. Founded by Peter Thiel and Max Levchin, Confinity developed an early form of online payments using palm pilots. Meanwhile, X.com founded by Elon Musk focused on email payments.
When the companies merged under the leadership of Thiel and Musk, PayPal as we know it today was born. One of its early innovations was allowing users to send money to an email address linked to a PayPal account. This eliminated the need to exchange sensitive financial information.
Over the next few years under eBay‘s ownership, PayPal rapidly grew its user base. By 2007, it recorded over 100 million active accounts globally. In 2015, PayPal separated from eBay, became an independent publicly traded company and enabled growth across various financial verticals like credit and business financing.
Today PayPal helps facilitate over $1 billion in payment volume every day. Its ubiquity and brand reputation have turned it into a trusted platform for invoicing and receiving payments from clients across the world.
PayPal Invoices vs. Requesting Money
Before we jump into the invoice creation process, it‘s important to understand how PayPal invoicing differs from requesting money – one of PayPal‘s original and most used features.
With PayPal‘s money request feature, you can send a request for funds directly to a person’s email address or PayPal account. It‘s useful for quick, casual money transfers between friends, family or clients. However, customization and management options are limited.
You don‘t have the ability to:
- Brand the request or add your business logo
- Itemize services or breakdown costs
- Set payment reminders
- Offer installment options
- Automate recurring billing
PayPal Invoices fill this gap by offering much more flexibility and control, mimicking real paper invoices.
With PayPal Invoicing you can:
- Fully customize the look and content of invoices
- Add multiple items/services as line items
- Set up billing schedules and automated reminders
- Offer discounts
- Accept partial and installment payments
- Allow payment via credit card, debit card or bank transfer in addition to PayPal balance
The invoicing interface centralizes all your client interactions in one place – from creating and sending invoices to receiving payments and generating accounting reports.
For freelance professionals and service-based businesses, PayPal Invoicing provides the right mix of flexibility, management and transparency needed for recurring client billing.
Step-by-Step Guide: How to Send An Invoice on PayPal
Ready to send your first PayPal invoice? Follow this simple 7 step process to get started:
Step 1: Log In to Your PayPal Account
Visit paypal.com and click on the "Log In" button in the top right. Enter your PayPal email address and password.
If you don‘t already have an account, you can sign up for free in just a few minutes.
Step 2: Access the Invoicing Page
Once logged in, there are a couple ways to access PayPal‘s invoicing interface:
Option 1) Click on the "Create an Invoice" icon on the dashboard as highlighted below:
Option 2) Click on "Send & Request" in the top menu and select "Invoices" from the drop down.
This will open up the main Invoicing page where you can view sent/received invoices or create a new one.
Step 3: Create New Invoice
From the Invoicing page, click on the "Create Invoice" button to start filling out billing details.
Step 4: Enter Recipient
In the "Bill To" field, enter the recipient‘s email address. If they are an existing PayPal customer or registered under your customer list, you can select their name from the drop down options too.
Next, add a reference number or invoice number if needed for your records.
Step 5: Itemize Services & Enter Prices
Scroll down to the "Items & Services" section to add invoice line items:
For each item or service, enter a descriptive title, quantity, rate and tax if applicable. The total will automatically calculate on the right.
You can add multiple line items using the "+" icon and also delete any unnecessary rows.
Step 6: Customize Invoice (Optional)
Want to spruce up your PayPal invoice with some branding? Click on the "Customize" tab in the top menu.
Here you can:
- Enter your business name & logo
- Add specific fields like website, phone number etc
- Set custom Terms & Conditions
- Enable the option for tips or partial payments
- Add messages or notes for your client on the invoice
Use these options to customize the look, content and policies on your PayPal invoices.
Step 7: Preview & Send
Before sending out the invoice, preview how it will appear to your recipient by clicking on the "Preview" icon.
Once you‘re satisfied, click "Send" and the invoice will be delivered instantly to your client‘s email.
That‘s it! You‘ve just sent your first invoice directly from PayPal in just a few easy steps.
PayPal Invoice Settings & Configuration
PayPal offers extensive invoice configuration options so you can fine-tune the invoicing experience to meet your business needs:
Customers
Centrally manage contacts by adding client and customer information like billing/shipping addresses and contact details. You can also view historical transaction data and invoices associated with each customer.
Business Information
Add your business name, logo, website, tax details etc. You can also choose to hide confidential address and phone number details on your invoices.
Items
Create preset items, products or services to quickly add to future invoices instead of typing the same details every time.
Taxes
Set up tax rates that will automatically apply to invoices in relevant states or countries. Supports up to 200 custom tax rates.
Templates
Design reusable invoice templates that you can quickly customize for monthly bills and recurring client invoices.
Automatic Reminders
Easily enable automatic payment reminder emails to customers when an invoice is approaching due date or overdue. Customize reminder frequency as needed.
More
Additional settings exist for payment terms, enabling discounts, deposits, accounting integration and more.
Many of these options are designed to help solopreneurs streamline their client billing and collections. PayPal wants to provide a seamless payments experience to help businesses get paid faster.
PayPal Invoice Tips
Utilize these expert tips and best practices while creating PayPal Invoices:
Privacy Settings
Respect your clients‘ privacy. In Business Information settings, disable options to show your personal address or phone number on invoices.
Saved Templates
Create reusable invoice templates right within PayPal if you bill the same items/services regularly. Apply templates to quickly generate monthly recurring invoices.
Payment Methods
When you send a PayPal invoice, clients can pay directly with their PayPal balance, bank account, debit/credit card for maximum flexibility.
Accounting Integration
Connect tools like QuickBooks or Xero to have PayPal invoices and payments automatically sync for straightforward recordkeeping.
Go Mobile
Manage invoices and accept payments on-the-go with the PayPal Business mobile app for Android and iOS.
Follow Up
Make use of automatic reminders or individual payment requests to gently follow up with clients regarding open invoices. PayPal enables you to securely get paid for your hard work.
The Benefits of PayPal Invoices for Small Business Owners
Here are some of the standout benefits that make PayPal invoicing an attractive billing solution:
- Free to use: Any individual or business PayPal account holder can send unlimited invoices for no added fees. Only standard per-transaction fees apply when money is sent or received.
- Easy to set up and use: The invoice process is intuitive even for non-technical users. You can be up and running in under 5 minutes.
- Flexible payment methods: Allows clients flexibility to pay invoices via PayPal, debit/credit cards, bank transfer or in installments.
- More professional than money requests: PayPal invoicing mimics physical paper invoices with ability to add branding, notes and payment terms familiar to traditional businesses.
- Recurring invoices: Schedule invoices to automatically bill clients on a recurring schedule for subscription services or retainer fee based business models.
- Accounting integrations: Seamlessly push invoice details into QuickBooks, Xero or other accounting platforms to simplify bookkeeping.
- Reminders for getting paid: Preconfigured reminders ensure clients receive automated alerts when payment is due or past due so you get paid on time.
For independent entrepreneurs and self-employed professionals, features like white label branding and accounting sync offer a big step towards legitimizing your business operations.
Meanwhile, automated invoices and reminders create consistent cash flow by taking the uncertainty out of client invoicing and collections.
How Does PayPal Make Money from Invoices?
At its core, PayPal is a payment processing business and makes money every time funds get transferred or transacted through its platform in the form of small fees.
Some of the standard PayPal fees include:
- 2.9% + $0.30 per invoice payment received
- Fees for online transactions via PayPal checkout
- Currency conversion fees on international payments
- Subscription fees for premium PayPal products
So while PayPal does not directly charge users to send invoices, it earns revenues when customers pay those invoices using various PayPal services.
This invoice feature ultimately serves as a smart lead generation model that organically brings more transaction volume and payment revenues into PayPal‘s ecosystem.
It allows PayPal to monetize those transactions with fees that are comparable or lower than credit card processing costs a business would otherwise incur.
PayPal Invoice Video Tutorial
Watch this quick 5 minute video showcasing the entire PayPal invoice creation and sending process:
PayPal Invoice FAQs
Here are answers to some frequently asked questions about PayPal invoices:
Can anyone receive or pay a PayPal invoice?
Yes, the recipient does not need their own PayPal account. When you send an invoice to an email address, PayPal facilitates payment via credit/debit card, bank transfer or PayPal balance if they already have one.
Do I need a business account to send invoices?
No, PayPal‘s free personal accounts also support sending unlimited invoices. However, business accounts unlock additional features useful for freelancers like accounting integrations.
Can I edit a sent invoice?
Unfortunately no, currently PayPal does not allow editing invoices after they‘ve been sent. However, you can create credit notes or send cancellation requests as needed.
How long does the payment due period last on invoices?
The default payment terms are 7 days from the send date, but you can customize the due period as needed from account settings.
Can I export invoice reports from PayPal?
Yes, the ability to download detailed CSV reports containing invoice history data for all recipients is provided within account settings.
Get Started with PayPal Invoices Today
PayPal invoicing provides microbusiness owners, creators and knowledge workers powerful tools to formalize and scale their client billing operations.
Integrations with accounting, tax solutions and business banking unlock further opportunities to digitize financial workflows under one roof.
We‘ve only scratched the surface of PayPal‘s expanding universe of business management offerings tailored for solopreneurs.
If you‘ve yet to onboard your freelance or small business operations to PayPal Invoicing, today is a great day to get started and say goodbye to manual client invoicing!
