Invoice Statuses Explained: From Draft to Paid
Direct Answer
An invoice status indicates where a bill sits in the accounts receivable lifecycle. In normal operations, an invoice progresses predictably through four primary stages: Draft → Sent → Due → Paid. If an exception occurs, it diverts into secondary branches: Partially Paid, Overdue, Disputed, Void, or Written Off.
The Invoice Lifecycle: Happy Path vs. Exceptions
Understanding these status transitions clarifies cash flow forecasting and prevents bookkeeping confusion:
Represents 85%+ of regular billing: the invoice is drafted accurately, delivered to the client, cleared by accounts payable on or before the due date, and marked paid with zero friction.
Overdue Path: Sent → Due Date Missed → Overdue (30/60/90 Days) → Follow-Up Reminders / Late Fee → Paid.
Dispute Path: Sent → Disputed → Negotiation → Credit Note / Revised Invoice → Settled.
Installment Path: Sent → Partially Paid (Deposit) → Balance Due → Final Payment → Paid.
Cancellation: Draft / Sent → Void (Preserved for numerical tax audit continuity).
Operational Actions for Every Invoice Status
Draft
The invoice is being prepared or edited and has not yet been issued to the client.
No legal payment obligation exists yet; does not affect accounts receivable or income statements.
Review itemized line items, billable hours, rates, client billing address, and payment terms before finalizing.
Sent / Issued
The invoice has been finalized and delivered to the client via email, portal, or postal mail.
Formally enters accounts receivable (AR). The client's credit period (e.g. Net 30) begins ticking.
Verify delivery receipt and ensure accounting files archive a PDF copy with the matching invoice sequence number.
Viewed / Opened
The client or their accounts payable contact has opened the digital invoice link or downloaded the document.
Confirms delivery and receipt, eliminating the common client defense of 'we never received that bill.'
Monitor for upcoming due dates; no immediate reminder needed unless accompanied by questions.
Due (Upcoming)
The invoice is currently within its active credit window and approaching the contractual due date.
Healthy current asset on the balance sheet; represents anticipated working capital.
Optionally send an automated or friendly courtesy reminder 2–3 days prior to large enterprise deadlines.
Partially Paid
The client has made an installment, deposit, or partial remittance, leaving an outstanding balance.
Partially reduces accounts receivable; the remaining uncollected balance remains subject to the original due date.
Issue a payment receipt acknowledging the funds received and specify the remaining unpaid balance with due date.
Paid / Settled
The full invoice amount has been successfully received, processed, and cleared into your bank account.
Clears accounts receivable; shifts funds into cash/operating bank accounts; closes the transaction.
Send a polite confirmation receipt or thank-you note and close out the accounting job or project phase.
Overdue / Past Due
The payment deadline has elapsed without full payment being cleared in your account.
Ages into overdue AR buckets (1–30, 31–60, 61–90, 90+ days). Increases financial carry costs and risk of bad debt.
Initiate graduated payment follow-up reminders; apply contractual late fees if stipulated in the agreement.
Disputed
The client formally questions or rejects a line item, total amount, milestone completion, or scope of work.
Payment is frozen pending review. Skews aging reports if not handled quickly.
Halt automated late notices immediately. Schedule a clarification call, verify records, and issue a credit note if needed.
Void / Cancelled
The invoice was cancelled due to a typographical error, wrong client, or mutually cancelled order before payment.
Permanently neutralized. The invoice number remains logged for audit trails with a zero balance.
Never delete an invoice number. Keep the voided invoice documented with notes explaining the cancellation reason.
Written Off (Bad Debt)
The balance has been deemed uncollectible after exhaustive recovery efforts (e.g., client bankruptcy or insolvency).
Transfers the balance out of accounts receivable into Bad Debt Expense on your profit and loss statement.
Archive all collection communications for annual tax deductions or write-off documentation with your accountant.
Frequently Asked Questions
What is the difference between an Overdue invoice and a Disputed invoice?
An overdue invoice simply has not been paid by its scheduled due date, often due to administrative delays or forgotten schedules. A disputed invoice has been actively challenged by the client due to disagreements over deliverable quality, scope, billing rates, or terms.
Should I ever completely delete an invoice instead of voiding it?
No. For accounting compliance and tax audit trails, you should never delete an invoice once it has been numbered and issued. Invoices must maintain a continuous numerical sequence. If an invoice was created in error, mark it as 'Void' with a brief memo so the gap in numbering is explained.
When should an unpaid invoice be marked as Written Off?
An invoice is typically written off as bad debt when it is 90 to 180 days delinquent, all reasonable follow-up attempts have failed, and the debtor is unresponsive, out of business, or legally insolvent. Consult your CPA to claim the deduction correctly.
How do I handle an invoice when a client overpays?
If a client pays more than the invoiced balance, do not leave the invoice in a confusing state. Either refund the excess immediately or issue a formal credit memo to apply the surplus toward future billings.
Does an invoice status change automatically when sending via email?
When using dedicated accounting software, the status updates to 'Sent' once dispatched and 'Viewed' when opened. In standalone or manual invoicing systems, users update statuses manually in their accounts receivable spreadsheet or tracking ledger.