When you want to invite someone from outside of your Office 365 environment to collaborate in your SharePoint Online website, there are a few configurations you will need to do, in order to allow sending invitations to theseexternal users. If these are not performed you may find the following error when sending a SharePoint Online External user a site invitation:

The following steps are required to invite external users to SharePoint:

1) Log into Microsoft Portal as administrator.

2) Click Admin and then Manage under SharePoint Online

3) Choose Manage site collections
4) Select Settings – Manage External Users from the menu

5) Click Allow to enable Site Collections to send external users invitations to the SharePoint Online Website andSave.

6) Browse to your SharePoint Site.

Actions – Site Settings

8) Click the Site Collection Features

9) Click Activate for the External User Invitations feature

You will now be able to invite external users to your SharePoint