How to mark an invoice as paid

This article explains how to record a payment from your customer that pays off a single invoice.

NB: If you want to mark more than one invoice as paid with a single payment, please read this article instead.

You can either mark an invoice as paid by explaining a bank transaction, adding a manual payment to the invoice or adding a manual bank transaction.

Option 1: Explain the uploaded transaction in your bank account

If your bank transactions arrive in your bank account through either uploading a statement or through a bank feed, your invoice payment will appear in FreeAgent as an unexplained transaction. Navigate to the ‘Banking’ tab at the top of the screen and select ‘Bank Accounts’ from the drop-down menu.


Then choose the relevant bank account from the list of accounts.


To allocate the payment to the appropriate invoice, first select the transaction in your bank account.

Explain it as an invoice receipt. FreeAgent will try to choose the appropriate invoice based on the outstanding amount. If correct, you can just save the explanation. If FreeAgent has selected the wrong invoice, remove the selected invoice by clicking the cross at the right of the invoice field, and then type in a reference or amount to filter to the correct invoice.


When you're sure you have chosen the right invoice for the transaction, save the explanation and the invoice will now be marked as paid.

Option 2: Add a manual payment from the invoice

When you've sent the invoice, you'll see an 'Actions' drop-down menu displayed at the top.


If the money was paid into the bank account displayed on this invoice, click the 'Add a manual bank transaction' option from the drop-down menu and enter the appropriate date and amount for the payment.


If the money was paid into a different account (for example, your business's savings account, or your cash account), please use Option 3 below.

Top tip: You can temporarily add manual payments while you're waiting for the payment to arrive in your bank account via either a statement upload or bank feed import. When you come to explain the imported transaction, click through to 'More Options' and you'll see an extra box asking if you want to use an existing manual entry. To match this transaction to the manual payment you've previously added, select the 'Use Selected Entry' button.


Option 3: Add a manual payment in the bank account

If the bank account the payment was made into isn't the one displayed on the invoice, then you'll need to enter a manual invoice receipt in the appropriate bank account.

Navigate to the 'Banking' tab at the top of the screen and select 'Bank Accounts' from the drop-down menu.

Choose the relevant bank account and select 'More' and 'Add Transaction'.


Select 'Invoice Receipt' from the 'Type' drop-down menu. In the Invoice field, type in the invoice reference number, contact name, or total amount to help FreeAgent search for the right invoice to allocate to this payment. Select the invoice from the list.


Create the manual transaction and the invoice will now be marked as paid.

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