Yes, Paypal has an invoicing tool - it's pretty bare bones but is totally free.
I don't use that - just copy and paste the top part of my invoice in to the 'notes' section of a regular Paypal money request and then send a PDF of my invoice to the client via email along with the Paypal request.

What kinds of features do you want the invoicing tool to have?

A quick search on Google brings up a few templates for XL, etc. as well as some possible free downloads. I hope that helps!

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