diff --git a/static/js/index.js b/static/js/index.js
index 9a29711..c13c628 100644
--- a/static/js/index.js
+++ b/static/js/index.js
@@ -92,7 +92,11 @@ window.app = Vue.createApp({
         payment_method: 'cash',
         description: '',
         reference: '',
-        loading: false
+        loading: false,
+        invoice: null,
+        paymentHash: null,
+        checkWalletKey: null,
+        pollIntervalId: null
       }
     }
   },
@@ -103,6 +107,13 @@ window.app = Vue.createApp({
         clearInterval(this.payDialog.pollIntervalId)
         this.payDialog.pollIntervalId = null
       }
+    },
+    'settleReceivableDialog.show': function(newVal) {
+      // When dialog is closed, stop polling
+      if (!newVal && this.settleReceivableDialog.pollIntervalId) {
+        clearInterval(this.settleReceivableDialog.pollIntervalId)
+        this.settleReceivableDialog.pollIntervalId = null
+      }
     }
   },
   computed: {
@@ -867,18 +878,132 @@ window.app = Vue.createApp({
       // Only show for users who owe castle (negative balance)
       if (userBalance.balance >= 0) return
 
+      // Clear any existing polling
+      if (this.settleReceivableDialog.pollIntervalId) {
+        clearInterval(this.settleReceivableDialog.pollIntervalId)
+      }
+
       this.settleReceivableDialog = {
         show: true,
         user_id: userBalance.user_id,
         username: userBalance.username,
         maxAmount: Math.abs(userBalance.balance), // Convert negative to positive
         amount: Math.abs(userBalance.balance), // Default to full amount
-        payment_method: 'cash',
+        payment_method: 'lightning',
         description: `Payment from ${userBalance.username}`,
         reference: '',
-        loading: false
+        loading: false,
+        invoice: null,
+        paymentHash: null,
+        checkWalletKey: null,
+        pollIntervalId: null
       }
     },
+    async generateSettlementInvoice() {
+      this.settleReceivableDialog.loading = true
+
+      // Clear any existing polling interval
+      if (this.settleReceivableDialog.pollIntervalId) {
+        clearInterval(this.settleReceivableDialog.pollIntervalId)
+        this.settleReceivableDialog.pollIntervalId = null
+      }
+
+      try {
+        // Generate an invoice on the Castle wallet for the user to pay
+        const response = await LNbits.api.request(
+          'POST',
+          '/castle/api/v1/generate-payment-invoice',
+          this.g.user.wallets[0].adminkey,
+          {
+            amount: this.settleReceivableDialog.amount
+          }
+        )
+
+        // Store invoice details
+        this.settleReceivableDialog.invoice = response.data.payment_request
+        this.settleReceivableDialog.paymentHash = response.data.payment_hash
+        this.settleReceivableDialog.checkWalletKey = response.data.check_wallet_key
+
+        this.$q.notify({
+          type: 'positive',
+          message: 'Lightning invoice generated! User can scan QR code or copy to pay.',
+          timeout: 3000
+        })
+
+        // Start polling for payment
+        this.pollForSettlementPayment(
+          response.data.payment_hash,
+          response.data.check_wallet_key
+        )
+      } catch (error) {
+        LNbits.utils.notifyApiError(error)
+      } finally {
+        this.settleReceivableDialog.loading = false
+      }
+    },
+    async pollForSettlementPayment(paymentHash, checkWalletKey) {
+      // Clear any existing interval
+      if (this.settleReceivableDialog.pollIntervalId) {
+        clearInterval(this.settleReceivableDialog.pollIntervalId)
+      }
+
+      // Poll every 2 seconds for payment status
+      const checkPayment = async () => {
+        try {
+          const response = await LNbits.api.request(
+            'GET',
+            `/api/v1/payments/${paymentHash}`,
+            checkWalletKey
+          )
+
+          if (response.data && response.data.paid) {
+            // Record payment in accounting - this creates the journal entry
+            // that settles the receivable
+            try {
+              await LNbits.api.request(
+                'POST',
+                '/castle/api/v1/record-payment',
+                this.g.user.wallets[0].adminkey,
+                {
+                  payment_hash: paymentHash
+                }
+              )
+            } catch (error) {
+              console.error('Error recording settlement payment:', error)
+            }
+
+            this.$q.notify({
+              type: 'positive',
+              message: 'Payment received! Receivable has been settled.',
+              timeout: 3000
+            })
+
+            // Close dialog and refresh
+            this.settleReceivableDialog.show = false
+            await this.loadBalance()
+            await this.loadTransactions()
+            await this.loadAllUserBalances()
+            return true
+          }
+          return false
+        } catch (error) {
+          // Silently ignore errors (payment might not exist yet)
+          return false
+        }
+      }
+
+      // Check every 2 seconds for up to 5 minutes
+      let attempts = 0
+      const maxAttempts = 150 // 5 minutes
+      this.settleReceivableDialog.pollIntervalId = setInterval(async () => {
+        attempts++
+        const paid = await checkPayment()
+        if (paid || attempts >= maxAttempts) {
+          clearInterval(this.settleReceivableDialog.pollIntervalId)
+          this.settleReceivableDialog.pollIntervalId = null
+        }
+      }, 2000)
+    },
     async submitSettleReceivable() {
       this.settleReceivableDialog.loading = true
       try {
diff --git a/templates/castle/index.html b/templates/castle/index.html
index 1cf8d8e..df33a88 100644
--- a/templates/castle/index.html
+++ b/templates/castle/index.html
@@ -1161,6 +1161,7 @@
         dense
         v-model="settleReceivableDialog.payment_method"
         :options="[
+          {label: 'Lightning Invoice', value: 'lightning'},
           {label: 'Cash', value: 'cash'},
           {label: 'Bank Transfer', value: 'bank_transfer'},
           {label: 'Check', value: 'check'},
@@ -1174,7 +1175,46 @@
         :rules="[val => !!val || 'Payment method is required']"
       ></q-select>
 
+      <!-- Show invoice if lightning method selected and generated -->
+      <div v-if="settleReceivableDialog.payment_method === 'lightning' && settleReceivableDialog.invoice">
+        <q-separator class="q-my-md"></q-separator>
+
+        <div class="text-center q-mb-md">
+          <div class="text-subtitle2 q-mb-sm">Lightning Invoice Generated</div>
+          <qrcode-vue
+            :value="settleReceivableDialog.invoice"
+            :size="280"
+            level="M"
+            class="q-mb-md"
+          ></qrcode-vue>
+
+          <q-input
+            filled
+            dense
+            readonly
+            v-model="settleReceivableDialog.invoice"
+            label="Invoice"
+          >
+            <template v-slot:append>
+              <q-btn
+                flat
+                dense
+                icon="content_copy"
+                @click="copyToClipboard(settleReceivableDialog.invoice)"
+              >
+                <q-tooltip>Copy invoice</q-tooltip>
+              </q-btn>
+            </template>
+          </q-input>
+
+          <div class="text-caption text-grey q-mt-sm">
+            Waiting for payment...
+          </div>
+        </div>
+      </div>
+
       <q-input
+        v-if="settleReceivableDialog.payment_method !== 'lightning'"
         filled
         dense
         v-model="settleReceivableDialog.description"
@@ -1185,6 +1225,7 @@
       ></q-input>
 
       <q-input
+        v-if="settleReceivableDialog.payment_method !== 'lightning'"
         filled
         dense
         v-model="settleReceivableDialog.reference"
@@ -1194,9 +1235,28 @@
       ></q-input>
 
       <div class="row q-mt-md q-gutter-sm">
-        <q-btn unelevated color="primary" type="submit" :loading="settleReceivableDialog.loading">
+        <!-- For lightning: generate invoice button, then it auto-settles on payment -->
+        <q-btn
+          v-if="settleReceivableDialog.payment_method === 'lightning' && !settleReceivableDialog.invoice"
+          unelevated
+          color="primary"
+          @click="generateSettlementInvoice"
+          :loading="settleReceivableDialog.loading"
+        >
+          Generate Invoice
+        </q-btn>
+
+        <!-- For non-lightning: manual settle button -->
+        <q-btn
+          v-if="settleReceivableDialog.payment_method !== 'lightning'"
+          unelevated
+          color="primary"
+          type="submit"
+          :loading="settleReceivableDialog.loading"
+        >
           Settle Receivable
         </q-btn>
+
         <q-btn v-close-popup flat color="grey">Cancel</q-btn>
       </div>
     </q-form>