Creating and sending an invoice

Creating an invoice opens a full-page flow with the form on the left and a live preview of the invoice on the right, so you can see how the invoice will look as you fill it out.

1. Start a new invoice. Go to: Banking > Invoices > Create Invoice You’ll first select or create a customer.
   • Select an existing customer by searching by name or email, and click Continue
   • Add a new customer by clicking Add customer, then enter customer name, email, and optional mailing address. Customer addresses can be domestic or international. Click Add customer, then Continue.
   After selecting a customer, you can optionally add CC recipients. Toggle Add CC recipients to include additional email addresses that will receive a copy of the invoice email and any reminders. Enter email addresses separated by commas or press Enter after each one.
2. Add invoice details. On the Invoice details screen, you can:
   • Confirm or edit the invoice number
   • Add an optional PO number
   • Add line items (description, quantity, unit price)
   • Click Add Line Item to include more items
   The total updates automatically. Click Continue.
3. Set payment terms. On the Payment terms screen, you can:
   • Set the invoice date and due date
   • Add a memo for the payer
   • Add payment instructions
   If you need to receive payments via international wire transfer, check Include international wire details. When enabled, the invoice displays both ACH/domestic wire details and international wire details (SWIFT/BIC code, bank name, and bank address) so customers outside the US can send payment. Click Continue.
4. Payment details. On the Payment details screen, choose where the invoice payment should go:
   • Destination account: Select which Karat Banking account receives the invoice payment. Your primary checking account is selected by default. Closed accounts and Auto Tax Planning (ATP) accounts are not available as destinations; ATP allocations are handled separately by Auto Tax Planning.
   • Redirect incoming funds (also labeled Auto-split incoming funds). Turn this on to automatically send some or all of the invoice payment to other recipients as payouts once the invoice is paid. For each split, choose a recipient, add an optional description, and enter an amount. The combined split amounts must be less than or equal to the invoice total; anything left over stays in the destination account. See Redirecting incoming invoice funds for details.
   If your organization keeps automatic reconciliation on (the default: see Invoice settings), you’ll also see an Enable automatic reconciliation switch:
   • On (default): The invoice uses a unique virtual account number for the customer. Your checking account number stays private, and payments to that account are automatically matched to open invoices for that customer.
   • Off: The invoice shows the selected account’s real account and routing numbers on the PDF. Payments still arrive in that account, but Karat will not mark this invoice as paid automatically, and you can’t redirect incoming funds for this invoice.
   Use the per-invoice override when a specific client needs to see your real account details or handle reconciliation manually. If your organization has automatic reconciliation turned off, the switch isn’t shown and every invoice uses real account details. Click Continue.
5. Review and send. On the Review and send screen, you can:
   • Preview the full invoice on the right side of the page
   • Confirm invoice and due dates
   • Review billing and sender details
   • Confirm ACH and wire instructions
   • Review the destination account and the Redirect incoming funds summary if you turned on auto-split: it lists each recipient, description, and amount that will be paid out automatically once the invoice is paid
   If automatic reconciliation is enabled for this invoice, the invoice will include the customer’s unique virtual account number for payment tracking. If it is turned off, the invoice shows the real account and routing numbers of the checking account you selected in the previous step. Under Email Delivery, you can choose who receives the invoice by email:
   • Send invoice email to customer: enabled by default. Uncheck this if you want to generate the invoice without emailing the customer (for example, if you plan to share it manually). If you added CC recipients in the first step, they are listed here as well.
   • Allow customer payment clarification replies: off by default. When enabled, if Karat receives a bank payment that can’t be automatically matched to one of your open invoices, Karat emails the customer to ask which invoice it belongs to. Replies are routed to your sender email address, and the helper text shows the customer email that will be contacted and the sender email that will receive replies. This option can’t be checked when Send invoice email to customer is unchecked, since clarification emails require customer email delivery to be on. See Automatic invoice payment reconciliation for when these emails are sent.
   • Include yourself as a recipient: enabled by default. Sends a copy of the invoice to your email address.
   Click Create & send email to deliver the invoice. If you uncheck both email options, the button changes to Generate invoice and the invoice is created without sending any emails.

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Viewing invoice details

Select an invoice from Banking > Invoices to open its details in a drawer. The drawer has three tabs:

• Invoice: the invoice summary, status, and payment details.
• Auto-split: the automatic splits configured for the invoice.
• PDF: a preview of the invoice PDF.

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Viewing and editing auto-splits

Auto-splits automatically send part of an invoice payment to other recipients when the invoice is paid. Splits send without needing your approval. Any amount that isn’t split stays in your checking account. On the Auto-split tab, you can see:

• Each split’s recipient, description, amount, and status
• The split total compared to the invoice total
• The remainder that stays in checking

Each split shows one of these statuses: Waiting for invoice payment, Processing, Completed, Recipient action required, Failed, or Cancelled. To add or change splits:

1. Click Add splits, or Edit if the invoice already has splits.
2. Under Split by, choose Amount or Percentage.
3. For each split, select a recipient, add an optional description, and enter an amount (at least $0.01) or a percentage (0.01 to 100%). Each split must go to a different recipient.
4. To turn off a split, remove its row.
5. Save your changes. The split total can’t exceed the invoice total.

You can edit splits until a payment is recorded on the invoice. After the invoice is paid, splits are locked.

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Splitting to your other organizations

If you own other organizations on Karat, you can send a split straight to another organization’s Karat checking account. When you choose a split recipient, your other organizations appear in the recipient list with a Your org badge. Each organization can only receive one split per invoice. Only organizations that bank in the same Karat banking program as the invoice’s receiving account appear in the list. On the Auto-split tab, these splits show a Your organization badge and the label Karat checking. If one of these transfers is canceled, you can’t retry it.

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Retrying failed splits

If a split payout fails after the invoice is paid, the tab shows Your invoice is paid, but some splits failed. To retry:

1. Add funds to your payout checking account.
2. Click Retry split.

Karat only retries the failed splits. Splits that already succeeded aren’t sent again.

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Paying with Karat

New invoice PDFs include a Pay with Karat link that reads “Do you also have a Karat account? Pay instantly for free here.” Payers who are Karat customers can use this link to pay the invoice directly from their Karat account. When a payer opens the link, they:

1. Sign in to Karat, if they aren’t signed in already.
2. Review the issuer and the full outstanding balance.
3. Under Pay from, select one of their open Karat accounts.
4. Click Pay to confirm. Karat may ask for a verification code to complete the payment.

The payment always covers the full outstanding balance. Partial payments aren’t supported. While the payment is processing, the payer shouldn’t pay the invoice again. Karat marks the invoice paid after the bank confirms settlement. If the payer doesn’t have an eligible Karat account, they can pay using the ACH or wire instructions on the invoice instead.

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Sharing and refreshing the payment link

On the PDF tab, you can:

• Click Refresh invoice PDF to regenerate the PDF with a current payment link. Karat doesn’t send an email when you refresh. Download the PDF to share the new link.
• Click Copy Karat payment link to copy a payment link for an open or overdue invoice. Copied links expire after 7 days.

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Expired links

If a payer opens an expired Pay with Karat link, Karat automatically emails a fresh link to the customer’s email address on the invoice. The payer sees a message asking them to check their email. Karat only renews links for invoices that are still open or overdue and have a remaining balance.

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Duplicating an existing invoice

If you regularly send similar invoices, you can start a new invoice from a copy of an existing one instead of filling out the create flow from scratch. To duplicate an invoice:

1. Go to Banking > Invoices and click the invoice you want to copy to open its details.
2. Open the actions menu (⋯) in the invoice details modal and select Duplicate.
3. The create invoice flow opens with fields prefilled from the source invoice. Review each step, make any changes you need, and send the new invoice as usual.

Duplicate works on any invoice regardless of status (open, overdue, paid, or cancelled).

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What carries over

The following fields are copied from the source invoice:

• Customer (including CC recipients captured on the original)
• PO number
• Line items (description, quantity, and unit price)
• Payer memo
• Payment instructions
• Include international wire details setting

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What does not carry over

Some fields are intentionally regenerated or left blank so the new invoice is treated as a fresh document:

• Invoice number: a new invoice number is generated. You can still edit it on the Invoice details step.
• Invoice date: set to today.
• Due date: set to 30 days from today. Adjust on the Payment terms step if you need a different term.
• Line item IDs: regenerated for the new invoice.
• Payment link and destination account details: not copied. These are created fresh when the new invoice is generated.

If the source invoice can’t be loaded (for example, if it was deleted), you’ll see an error message and the create flow will open blank so you can still create an invoice manually. _{Karat is a fintech company, not an FDIC-insured bank. Banking and Card services provided by Grasshopper Bank, N.A., First Internet Bank of Indiana, and Cross River Bank, Members FDIC.}