How to Send PayPal Invoices

How to send invoices with PayPal: A step-by-step guide

Here’s exactly how to fill out an invoice with PayPal’s invoicing feature.

Step 1: Log in to your PayPal business account or sign up for one.

Source: PayPal

Step 2: Click on “Request,” and from the side panel, select “Create an invoice.”

Source: PayPal

Step 3: Either fill out the default template provided or, for customization, click on “More Actions,” which will give you options for refining the invoice template.

Source: PayPal

Step 4: Enter the invoice recipient’s email address. To add an email address to the system, click “Create new customer” and insert the information you wish to include on the invoice. You can also choose in this step to add additional customer details, such as their physical address and phone number. 

Source: PayPal

Step 5: Next, enter what item (product or service) the customer is being billed for. Then you can enter information like the quantity and the price. You also have an option to add sales tax or apply a discount.

Source: PayPal

Step 6: Double-check your completed invoice with the “Preview” button before sending it to the recipient.

Step 7: When you’re finished checking the invoice, hit “Send.” You can also create estimates or recurring invoices at this point.

Source: PayPal

Step 8: After sending the invoice, your customer will receive it in their email inbox. They can then use the PayPal platform to submit payment via credit or debit card, PayPal, or PayPal credit. You can track their payment history through the “Invoicing” section of your account and send reminders about the bill as needed. There are also options to issue a refund, print a label, cancel an invoice or add a memo for future information.

How PayPal invoices work

PayPal began its online payments system in 1998, and it currently provides a multitude of secure services. For example, the platform can function similarly to the best credit card processors and as a portal for collecting donations. The company had 428 million active accounts in the third quarter of 2023, according to Statista.

PayPal invoices have existed for more than 10 years and are available through free personal and business accounts. To use the invoicing function, you simply select a template, add the pertinent information and save the invoice for future use if you want. Once you’re finished creating the invoice, a preview option allows you to review the details before sending it. Once it’s sent, customers receive the personalized invoice and can use a simple click-through interface to send immediate payment by a variety of methods (credit or debit card, PayPal account, or PayPal credit). [Find out what small businesses should know about accounts receivable.]

After you send the invoice, the PayPal platform tracks the customer’s payment and notifies you when the bill is paid – or when you should follow up on unpaid bills. The latter probably won’t often be necessary, though: According to a 2023 report from PayPal’s Business Resource Center, 79% of the invoices it generates are paid within 24 hours of delivery. PayPal invoices can also handle different currencies and tax percentages, extending its user appeal.

“We find the PayPal invoicing system to be both efficient and effective, meaning that it takes us very, very little time to generate and send an invoice, and we then typically receive our funds [from overseas customers] in USD, our preferred currency, within days,” said Steven Rothberg, chief visionary officer and founder of College Recruiter, a job search site for students and recent graduates. “It is also easy to then move the net funds we’ve received from PayPal to our company’s bank account.”

[Read related article: Important Accounting Terms You Need to Know]

PayPal invoice features

These are some of the noteworthy features available when using PayPal’s invoicing tools:

• The ability to save invoice templates, customer contact information, items and taxes for quicker future input
• A scheduling option, which can automate recurring bills
• An ongoing tracking feature that captures the history of all billing and payment transactions, including when clients pay by check
• A reminder function for when invoices go unpaid
• Notifications when an invoice isn’t delivered or when payment appears in your account
• An option to create custom billing apps through the PayPal Invoicing API
• Acceptance of partial payments and tips
• Availability in more than 200 global markets

What does it cost to use PayPal for invoicing?

Using PayPal invoices doesn’t require any subscription or monthly fees; the company takes only a percentage of the transaction when you receive payment. PayPal is transparent about these costs and outlines the expected fee for a transaction on its Fees page.

In general, the fees range from about 3.49% to 8%, depending on the payment method and the transaction type, such as whether it is domestic or international.

• The PayPal Digital Payments fee for U.S. sellers is 3.49% of the payment, plus $0.49 per transaction.
• There are various fixed fees for international transactions, depending on the locations.

There are no minimum or maximum transaction amounts for using the PayPal invoicing service. A business may use the feature regularly or just occasionally, and can stop using it entirely without incurring a penalty.

Payments from domestic clients usually appear in your account soon after the customer transfers the amount billed. International interactions take a little longer. College Recruiter uses PayPal invoices only for particularly small or overseas transactions.

“We try to minimize the use of PayPal to receive payments, as the fees they charge greatly exceed those charged by the other means we’ve made available to our customers – ACH, credit card, check,” Rothberg said. However, “were it not for the ability to send these customers a PayPal invoice and be paid through that system, we would not be able to do business with those customers.”

Is PayPal invoicing right for you? 

PayPal’s invoicing feature has many strengths that could apply to businesses of all sizes. Its ability to integrate and seamlessly transfer funds between the platform and a bank account makes the service appealing to both companies and freelancers, as does the fact that the platform doesn’t charge subscription fees. 

However, enterprises that do a significant amount of international business may find the per-invoice transaction cost of using PayPal invoicing prohibitive. Even so, PayPal’s established presence, ease of use, customization features and availability across international markets make it a strong contender for any company looking for invoicing services. 

If you’re interested in exploring alternatives to PayPal, read our guide to learn about your options.

Jeremy Bender contributed to this article. Source interview was conducted for a previous version of this article.