Start any small business online, and chances are you’ll be sending someone a PayPal invoice before too long. The popular banking site has been commonplace for years, and is a trusted resource of many when it comes to the transfer of funds. Many small business owners have a bit of a love-hate relationship with the PayPal invoice system, due the number of perks and quirks built into the system. Perks and quirks that are detailed in this very article. (See also: 21 Cheap Business Ideas)


There’s a reason PayPal has become a global banking option, and it’s because the system does a number of things quite well. Here are a few of the perks that come along with sending a PayPal invoice instead of a traditional one.


Because the company has been around for so long, most businesses are open to not only receiving a PayPal invoice, but also sending money through the same system in order to pay bills. The chances of running across a company that refuses to deal with a PayPal invoice at all are extremely low, making it a valid choice for including on your list of accounts receivable resources if not for use as your primary resource. (See also: Inexpensive Solutions for Small Businesses)


If you send a PayPal invoice to a client or customer who pays quickly, you’ll notice that the money appears in your online account within a seriously speedy timeframe. For those who use PayPal funds to pay online bills or utilize their prepaid card system, this certainly adds to the appeal.


If you don’t like having to generate an entirely new document, the built-in ability to follow up a basic PayPal invoice with a payment reminder generated at the click of a button can feel like a gift of time and stress reduction. Also, for those coordinating payments for others as part of their core business model, the historical reports can streamline the preparation of expense reports. Options are also built into the PayPal system which allow cyclical payments for things like access to a private storage system for work documents and other professional resources, providing a resource for those interested in building passive income.


Developing a PayPal invoice as your preferred billing option might be a popular choice, but it doesn’t come without a few quirks. The following ones make my short list of annoying things to deal with.


When it comes to using the service for business purposes, the fees associated with accepting money via a PayPal invoice are bordering on outrageous. A number of my colleagues use Popmoney (formerly Zashpay) to collect revenue from clients, due to the fact that fees are charged to the sender unless you request the money yourself through the system. If that’s the case, then you will be charged a fee as well. At ninety-five cents it’s still less than you’d pay for a mid-sized PayPal invoice, although slightly more than double than they used to charge as Zashpay. Of course you can always use XS Invoicing or some of the other free software programs for small business owners to request funds from those customers who are open to a direct deposit situation.


With a monthly limit imposed as to how much you can transfer into your business bank account, send one PayPal invoice too many and you’ll find yourself needing to use alternative methods to access those funds. Their preferred method is of course a reloadable feature that works like a credit card at local stores. You simply reload it with funds from your account.

To me, this is far too limiting as it requires me to worry about another account entirely and I find it more convenient to pay bills from out house and business checking accounts exclusively, in addition to using our regular credit cards as appropriate. It also prevents me from channeling funds the way I want to towards savings accounts. All that being said, if your business is small the limit may not feel like an issue to you at all. (See also: Budget Business Strategies for Entrepreneurs)


It’s true that payments for a PayPal invoice register almost immediately in the system. But since you have to transfer the funds from there to your actual bank account which takes several days, it can be a drag to wait for monies that could have been available immediately to you if the person you were dealing with used direct deposit. Don’t get me wrong, it’s pretty common for clients who operate small businesses themselves to request a PayPal invoice and I’m not saying you shouldn’t participate especially if it will cost you some repeat business. What I am saying is you need to be aware of the quirks and make alternative choices when you can with long-term clients or those who are open to other payment methods you might suggest. (See also: 5 Tools for Handling Your Receipt Trail from the Road)

Bottom line? While sending the occasional PayPal invoice is to be an expected part of any small business routine, you may find that you need to incorporate other ways to accept monies from your accounts receivable inventory. (See also: The Perks and Quirks of Operating a Home Business.)

Myscha Theriault

Myscha Theriault

A lifelong money cruncher who can squeeze a nickel ‘til it cries, Myscha is a syndicated columnist, best-selling author, and founder of Trek Hound and We Be Sharin’.