Using PayPal for invoicing is one of the easiest and most user-friendly ways to bill clients. It’s simple to use, yet it is a robust and powerful platform for your basic client billing needs.
PayPal is ultra-secure, using the latest anti-fraud technology. Unless you upgrade to Website Payments Pro and process payments on your own website, all transactions are processed on PayPal’s secure hosted pages.
Before you rush off to set up invoicing, however, consider whether or not you need PayPal’s Website Payments Pro or your basic, free account.
- Your free PayPal account is all you need if you want to do simple client invoicing, and even offer a few products for sale (and accept credit cards).
For your products or service packages, you can install a PayPal button on your website. Your customer is taken to PayPal to log in and pay, and you can even brand your PayPal payment page with your logo and brand colors.
- Website Payments Pro is what you’ll need if you don’t want customers to leave your website/merchant account.
Note that you can accept credit card payments with both types of PayPal account – Website Payments Standard and Website Payments Pro.
Step 1. How PayPal Invoicing Works
You have most likely used PayPal to purchase products. Now it’s time to make it work for you, allowing you to make money by billing your clients. All you need is a verified PayPal account, so you can move money to your business bank account.
To verify your PayPal account:
To verify, link your bank account and credit card to your PayPal account. (PayPal calls for “either…or” bank account or credit card, but if you want to move client payments to your business bank account, you can choose both.)
1. Log into your PayPal account.
2. Look to see whether or not your account is verified (if you don’t remember setting this up).
3. If the anchor text reads “Unverified”, click on that link to be walked through the simple verification process.
Once your account is verified, you are ready to invoice your clients.
You can customize your Invoice Templates with your logo and business colors.
You can also copy invoices, if you want to bill for recurring jobs: E.g. billing Client “A” for her monthly $150.00 research package.
How much will billing through PayPal cost me?
There may or may not be fees, depending on certain conditions (e.g. whether or not payment is passing “cross border” or currency conversion is involved), but PayPal fees are generally negligible, and any disadvantage is dwarfed by the enormous benefit of being able to accept payments into your bank account – even if you never leave your room. (Clients love being able to pay easily through PayPal too – particularly within marketing niches, where PayPal accounts are often a “given”.)
Fees usually range between .30-50 cents or 1.9%-2.9% per transaction. But before you get too confused reading PayPal’s help sections detailing payment conditions, here’s how it works out in reality for a single service provider accepting both cross-border and at-home payments.
The cost of invoicing via PayPal seems to work out at a rough ballpark of about $3.00 (U.S. or CAD) per $100 of payment, per invoice, give or take .50 cents depending on variable factors such as the exchange rate.
The other fact you need to know:
If you withdraw amounts smaller than $150.00 from your bank account, you will be charged an extra 50 cents “withdrawal fee”. So it’s better to wait until you can withdraw $150.00 or more, if saving pennies is important to you.
All this can affect whether or not you choose to invoice monthly or per project.
(For more information on fees, check out PayPal’s article, When It’s Free and When There’s a Fee.
If you earn more than $3,000 CAD per month, you are eligible to apply for PayPal’s Merchant Rate – “which lowers your fees as your sales volume increases”.)
Step 2. PayPal Pro or Standard?
If you combine a service business with selling products at all, Website Payments Standard is still a solid option.
Your customers don’t need a PayPal account to pay you, so be sure to let them know this, right on your website. (All they need is a valid major credit card.)
With Standard, you can:
- Accept major credit card payments
- Brand your PayPal Page with your Logo and brand colors
Its benefits to you:
- No monthly fee
- No storage of sensitive payment data – customers pay on secure PayPal hosted pages
- You can easily add a payment button to your website
If you want more sophisticated features however, you may have to upgrade to Website Payments Pro. Be aware, however, that you will have to file a credit application.
The advantages of Pro:
- Customers never have to leave your site when purchasing
- Integrates with Shopping Carts.
But what if you don’t need all the bells and whistles? What if you simply want to create a client invoice via PayPal?
Here’s how to do it…
Step 3. Setting Up Your Invoicing
With your simple, verified PayPal account…
4. Log into your PayPal account.
5. Click on the blue Create an Invoice tab.
6. Click on the anchor text, “Invoice Settings”.
Since this is your first time client-billing through PayPal, we are going to set up your billing information. Once this is done, the next time you log on, you will select the big “+Create an Invoice” button instead.
As you can see, setting up your billing information is straightforward – your Business name, first and last name, address, telephone number, FAX, email, website and “additional information”.
Two drop-down buttons give you the option to display or hide your address and telephone number.
And then you “Save”.
Customizing Your Invoice:
You can access your settings at any time to change data in these fields; or add (or change) your Logo by clicking on one of the menu choices in your left-hand, vertical menu.
As you can see, uploading your logo is remarkably similar to many other online systems: You simply press the “Browse” button and locate your file. Then press “Upload”.
Finally, “Agree and Save”.
(Note: You don’t need to upload a Payment logo, unless you want customers to see something other than your Invoice logo: PayPal will display your Invoice logo automatically.)
- Add Tax Information if you are billing within your own state or province and the amount you are making requires you to charge tax:
- Select Saved Items if you frequently bill for repetitive items:
- Templates allow you to look at invoice templates you have created. (You can save any invoice as a template, and have multiples for different clients.)
- Address Book allows you to quickly select the email address of anyone who has paid you via PayPal in the past… or add a new contact.
There’s one other setting to take a look at on your main Invoice Settings page. Over to the right-hand side, you’ll find a hyper-link: Manage Settings…
Clicking on it will bring you to the same page you’ll end up on if you click on Create an Invoice” right from your main menu tab.
You will see a list of all the invoices you have created and sent, along with their status.
From this page, you can either click on the Create an Invoice button or Copy an invoice, if it’s for a recurring project (#2).
Notice that you can also simply press the “Request Money” button. It’s up to you, of course, which process you want to use – but creating actual invoices is easier to track and looks so much more professional to your clients (and bookkeeper!)
The difference between Requesting Money and Invoicing:
When you request money, the process is simple. You are asking your client directly for payment. You fill in the form below, and PayPal sends a plain email notification letting the client know you want money from them – no logos, no invoice numbers. They click on a link and pay via PayPal.
(Note that you can check the radio button for either “Goods” or “Services”.)
Now compare this with a professionally-set up PayPal invoice:
Sending out an actual invoice not only looks more professional, it also helps you filter and track your client payment histories.
And you can instantly see whether or not a particular invoice has been paid; or if you have to send a reminder (a one-click process).
You can filter by such criteria as:
- Past Due
You can also download your invoices into a .CSV file (your bookkeeper will love this feature) – and access “Invoice Help” at any time.
Pressing the Advanced Filter tab allows you to filter by specific parameters, such:
- Email address
- Client name
- Business name
- Invoice number
- Archived items
- Currency (e.g. all your USD payments or all your CDN payments)
- Invoice date
- Due date
- Payment Date
As well as including or excluding specific time periods.
The most common, practical use of Advanced filtering?
- Allowing you to download separate CSV files per client (it’s like having your own separate ledger pages)
Step 4. Sending Your Invoice
Once you have created your basic invoice settings (complete with logo), you can go ahead and send your first invoice.
1. Click Create an Invoice
2. Fill in the client’s payment email address
Your “Invoice Information” will be filled in automatically – though you can change the payment terms by clicking on the drop-down arrow.
3. Fill in the project details, including number of units and price per unit (PayPal will automatically multiply the total for multiple units).
Press the Preview button before sending.
4. Preview your invoice in a new page.
5. If it is correct, press Send.
You will then see your invoice listed in your PayPal Account Overview, together with the status:
That’s all there is to it from the PayPal end: However, you will receive via your email account:
- An email confirmation from PayPal, saying that your invoice has been sent
- An email confirming that payment has been made, the instant your client pays.
One last point: If you are creating service packages for clients, you can make it easy for them to buy automatically by placing a PayPal button on your website.
PayPal makes it easy to professionally invoice, do business – and get paid – with virtually no learning curves or complicated systems.