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How to Create an Invoice on PayPal

How to Create an Invoice on PayPal
Photo by Brett Jordan from Pexels

As a freelancer, you’ll likely already have a PayPal account set up to send and receive money. When it comes to invoicing your clients, PayPal offers several features that allow you to create and send invoices with ease. It’s also free, apart from the usual PayPal transaction fees. Below, we’ll go through the steps of how to create an invoice on PayPal.

The 3 steps to create an invoice on PayPal are:

  1. Log in to your PayPal account and go to “Create an invoice”
  2. Add the necessary information to the invoice template
  3. Save and send the invoice to your client

You can access PayPal’s basic invoice generator without a PayPal account, although by setting up a PayPal Business account you can access other handy features, such as invoice tracking. With an account, you can also save invoice templates or reuse invoices for recurring clients.

In this article, we look at these steps in more detail, as well as PayPal’s other invoicing features. But first, let’s look at what information you need to include on an invoice.

 

What to Include on an Invoice

If you’re based in the UK, HMRC requires you to include certain information on an invoice. To start, the document must be clearly marked as an “Invoice”. At a minimum, it also needs to include:

  • Your business name, address and contact details. You must also include a business name and address if applicable
  • Your client’s business name and address
  • A unique identification number
  • The invoice’s date of issue
  • Clear description of the goods/services provided, including quantities
  • Date the goods/services were provided
  • Total cost of each good/service
  • VAT (if applicable)
  • Total amount owed

It’s also a good idea to include:

  • Information as to how the invoice should be paid (bank account details or a PayPal address etc)
  • A payment timeframe
  • A thank you message

In the US, invoicing requirements are more relaxed, but including the above information is a good place to start. Invoicing regulations vary between states so it’s best to check the specific requirements with your local authority.

Once you know what to include in your invoice, there’s a wide range of options out there when it comes to creating one. Let’s take a closer look at how to create an invoice on PayPal.

 

3 Steps to Create an Invoice on PayPal

1. Log in to Your PayPal Account and Go to “Create an Invoice”

If you’re using a personal PayPal account, on the Summary Page go to More > Create an Invoice. If you’re using a PayPal Business account, go to Quick Links > Invoicing > Create Invoice. You’ll also find it under the “Pay & Get Paid” section in the top bar.

how to create an invoice on PayPal
Where you find this section depends on whether you have a personal or business account

2. Add the Necessary Information to the Invoice Template

Go through the invoice template and add the necessary information such as the client’s email, the item description, and pricing. By clicking on More Options, you can also add a message to your client, the terms of payment, and a unique reference number. You can also add your logo to the invoice if you have one.

3. Save and Send the Invoice to Your Client

Once you’re done, click Preview to check that the information you’ve entered is correct. If you need to make any changes, click Edit Invoice. Once you’re happy with the invoice, click Send to email it directly to your client for payment. If your client requires a hard copy, just save the invoice as a PDF and print. This is also a good idea to keep one for your offline records. Clients can pay through PayPal if they have an account, or by using their credit or debit card.

create an invoice on PayPal
Make sure to save it as a PDF for your own records

Additional Invoicing Features With a PayPal Business Account

There are several additional invoicing features available to PayPal Business account users. Under the Invoicing section of your account, you can view a full list of invoices you’ve issued. You can track and complete payments and send manual or automatic payment reminders to clients via your PayPal account. PayPal also saves recurring clients and inventory to help generate future invoices faster.

Are PayPal Invoices Free?

PayPal invoices are free. It’s free to set up a PayPal account, and straight away you’re able to send invoices to your clients, completely free of charge. The usual fees still apply for sending and receiving money on PayPal, where applicable.

 

Pros and Cons of Invoicing on PayPal

When it comes to generating invoices, PayPal is easy to use and the additional features it offers for business account holders help you keep track of your clients’ payments. But there is a caveat when it comes to using PayPal as an invoicing software for your business. While PayPal doesn’t charge any additional fees to generate or track invoices, the usual transaction fees apply to any online payments your clients make.

PayPal’s fee structure is quite complex, particularly when making payments or withdrawing money in different currencies. PayPal calculates fees based on the location/currency of the recipient and of the payee. They can add up, sometimes to 5% of the transaction. It’s worth double checking these fees to see if they’re viable for you in the long term, particularly if you’re working with clients in various countries or currencies.

However, PayPal is still a great way to invoice clients if you want a free template and a simple system, making it ideal for freelancers. If you want to know more about invoicing as a freelancer, check out this article. For more freelancing content, simply head over to the Sophical Blog, or check out the articles below.

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