The short version: you invoice someone through PayPal by logging into your business account, clicking “Create invoice” under the Pay & Get Paid section, adding the client’s email and line items, then hitting send, and the client pays with a card or their own PayPal balance without needing an account themselves. It takes about four minutes once you’ve done it twice. The part nobody tells you is what happens after you hit send, which is where this guide earns its keep.
What you need before you start
You need a PayPal Business account, not a personal one. If you’re invoicing anyone for goods or services you’re being paid to provide, PayPal’s terms require a business account anyway, and personal accounts have lower limits and fewer invoicing tools. Setting one up takes about ten minutes: business name, address, and a bank account to link for withdrawals. If you’re a sole trader in the UK you can use your own name as the business name, which trips people up because they assume “business account” means registering a limited company. It doesn’t.
You’ll also want the client’s email address, a clear description of what you’re charging for, and your payment terms sorted in your head before you open the invoice screen, because PayPal’s form will ask you for due dates and you don’t want to be guessing on the spot.
How to create and send a PayPal invoice, step by step
- Log into your PayPal business account and go to the “Pay & Get Paid” tab, then select “Create and manage invoices.”
- Click “Create invoice.”
- Enter the client’s email address in the “Bill to” field. This is the only field that’s non-negotiable, the invoice literally can’t be sent without it.
- Add your logo if you have one, plus an invoice number (PayPal auto-generates one, but I always overwrite it to match my own numbering system, more on why below).
- Fill in the line items: description, quantity, and rate. If you’re charging a flat project fee, put it as one line rather than breaking it into hours, it looks tidier and clients query it less.
- Set the due date. PayPal lets you pick “due on receipt” or a specific date, and you can also set up automatic reminder emails if it’s not paid.
- Add a note in the memo field. This is where you put your payment terms in plain English, things like “Payment due within 14 days” or “10% late fee applies after 30 days.”
- Preview the invoice, check the currency (this catches people constantly if they’ve got US clients and the default has slipped to USD when they meant GBP), and click send.
The client gets an email with a “View and pay invoice” button. They don’t need a PayPal account to pay it, they can pay as a guest with a debit or credit card, which matters because plenty of small business owners assume both sides need an account and that’s simply not true.
What it costs you
This is the bit most PayPal guides skip, and it’s the one that changes people’s decisions the most. PayPal charges the seller a fee for every invoice paid, not the buyer. In the UK, for a standard commercial transaction, you’re looking at roughly 2.9% plus a fixed fee of around 30p for domestic payments, and it climbs to closer to 3.9% plus a fixed fee for international clients paying in a different currency, with a currency conversion markup on top of that if the amounts aren’t in the same currency to start with.
So on a £1,000 invoice to a UK client, you might net around £961 after fees. On a £1,000 invoice to a client in the US paying in dollars, once you add the conversion spread, you could easily lose £50 to £60 total. That’s not a rounding error, that’s real money, and if you’re invoicing five figures a month through PayPal, it adds up to thousands a year that a bank transfer or a proper invoicing tool with lower processing fees wouldn’t take from you. I’d bring this up front in any invoice template that’s designed to get you paid faster, because the template matters less than the payment rail you’re forcing money through.
The uncomfortable bit: PayPal can hold your money
Here’s the part that caught me out early on and that most “how to invoice on PayPal” articles conveniently leave out. In 2013, when I was still building out my speaking and coaching income alongside consulting, I invoiced a new US client for a four-figure coaching package through PayPal because it was the fastest way to get something in front of them. The invoice was paid within an hour. The money didn’t land in my account for 21 days.
PayPal flags payments as higher risk when they come from a newer account relationship, a large amount relative to your usual invoicing history, or a first-time payment from that particular client, and it holds the funds “for security” while it reviews the transaction. There was no fraud, no dispute, nothing wrong with the invoice. It was simply the algorithm deciding a chunkier-than-usual payment needed watching. I had a mortgage payment due that week and had planned around that money landing straight away, which was my mistake as much as PayPal’s, but it taught me never to rely on PayPal money being available the moment it says “paid.”
If you’re invoicing someone for the first time, or for a larger amount than usual, build in a buffer of two to three weeks before you assume that cash is spendable. This is the one thing that separates people who use PayPal invoicing comfortably from people who get burned by it, and it’s rarely mentioned because most guides are written by people describing the process in theory rather than people who’ve had a payment sit in limbo while a bill was due.
Getting the invoice details right
PayPal will let you send an invoice with almost nothing on it beyond an amount and an email, which is a problem if you ever need that invoice for your own books. If you’re a sole trader, you should still be putting your business name, your address, and a proper invoice number on every single one, exactly the way you would if you were invoicing correctly as a sole trader through any other channel. HMRC doesn’t care that the platform was PayPal, they care that your records are consistent and complete, and a folder of PayPal invoices with no invoice numbers or client addresses is exactly the kind of mess that makes a tax return painful.
This connects to a bigger point worth saying plainly: you still need to keep your own copies. PayPal shows you a transaction history, but if you’re ever asked what you need to keep for your tax return, the answer includes the actual invoice document, not just a line in a payment processor’s dashboard that could theoretically disappear if your account gets restricted, which does happen, more often than PayPal would like people to know.
Recurring invoices and why I stopped using PayPal for retainer clients
PayPal does support recurring invoices for clients you bill monthly, and it works fine on paper. You set a schedule, PayPal sends it automatically, the client pays the same way each time. Where it fell apart for me was fee creep. On a £2,000 monthly retainer, the PayPal fee alone was costing roughly £60 to £80 a month depending on the client’s location and currency, which is £720 to £960 a year lost to processing fees on a single client relationship. Once I had four or five retainer clients on PayPal, that was thousands of pounds a year disappearing that a bank transfer arrangement or a lower-fee invoicing platform wouldn’t have touched.
I moved recurring clients to direct bank transfer with a proper invoicing tool instead, and kept PayPal purely for one-off invoices to new or international clients who wanted the convenience of paying by card without setting up a transfer. That split is worth thinking about before you assume PayPal is your default for everything, the same way it’s worth checking whether your wider marketing tech stack is costing more than it should, because payment processing fees are exactly the kind of quiet, recurring cost that never shows up on anyone’s radar until you add up a year of them at once.
A few practical things that trip people up
- You can’t invoice someone through PayPal without their email address, and if you get it wrong, the invoice goes nowhere and won’t bounce back to tell you clearly, it just sits unpaid and unseen.
- You can edit an invoice after sending it as long as it hasn’t been paid, but once it’s paid, you can’t change the amount, you’d need to issue a refund or a new invoice.
- PayPal invoices can be set up with partial payment allowed, which is worth switching on for larger projects where a client might want to pay in stages rather than in full.
- If a client disputes a PayPal payment, PayPal sides with the buyer more often than sellers expect, especially on service-based work where “goods not delivered” is hard for either side to prove definitively. Keep records of what you delivered and when, outside of PayPal itself.
Is PayPal invoicing the right choice
For a one-off invoice to someone abroad who wants to pay by card in the next five minutes, PayPal invoicing is hard to beat for speed. For anything recurring, for larger sums, or for a client relationship you expect to run for a year or more, the fees and the fund holds make it a worse deal than it looks on the surface. Plenty of freelancers default to PayPal because it’s the platform they already have logged in, not because they’ve compared what it costs against the alternative. That’s a habit worth breaking the moment your invoicing volume goes up, because at scale, the “convenient” option quietly becomes the expensive one.
Frequently asked questions
Does the person I’m invoicing need a PayPal account to pay me?
No. PayPal lets the recipient pay as a guest with a debit or credit card directly from the invoice email, no PayPal account required on their end.
How long does it take to get the money after a PayPal invoice is paid?
Often the funds show as available immediately, but PayPal can place a hold of up to 21 days on payments it flags as higher risk, which is more common with new accounts, larger-than-usual amounts, or first-time payments from a client, so don’t plan your cash flow assuming instant access.
What fees does PayPal charge for invoicing in the UK?
For a standard domestic commercial transaction it’s roughly 2.9% plus a fixed fee of around 30p, rising to closer to 3.9% plus a fixed fee for international payments in a different currency, plus a currency conversion markup where relevant.
Can I set up an invoice that repeats every month automatically?
Yes, PayPal supports recurring invoices with a set schedule, but the same percentage fee applies to every single payment, so for ongoing retainer clients it’s worth calculating the annual cost against a lower-fee alternative before committing to it long-term.
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